Every now and then, lawmakers in Washington make noise about changing various sections of the tax advantaged retirement accounts I’m so fond of recommending to my clients. Now that we’re living substantially longer, and a greater portion of our lives is actually spent in retirement, there’s a good argument that we should increase age limits, mandatory distributions, and other rules governing IRAs, 401(k)s and other types of accounts.
I usually don’t pay much attention to this speculation until there’s a bill on the floor that has a strong chance of becoming law. The majority of the legislation drafted in this area doesn’t get far, and often doesn’t even get out of committee.
Nevertheless, the house and senate have both recently introduced bills that would change how retirement accounts work. I’m no political expert, and don’t have the foggiest idea what the chances are of one of these bills passing. But from what I’m reading there’s more momentum for retirement reform now than there’s been in the last several years. Plus, more than one client asked my thoughts on the subject recently so I felt a summary post would be appropriate. This post will cover what happened & why it might be important to you.
In February the senate introduced a bill called the “Retirement Enhancement and Savings Act” (or RESA), aimed at fixing America’s retirement savings problems – both in the public and private sectors. This isn’t the first bill on retirement reform that’s been introduced recently. Multiple versions containing similar provisions have been introduced since 2016, which speaks to the growing interest in helping Americans save for retirement.
Meanwhile, the house passed the SECURE Retirement bill (Setting Every Community Up for Retirement Enhancement Act) about a week and a half ago in a 417-3 vote. This bill contains many of the same provisions as RESA, and the bipartisan support on both sides of congress could mean one of the bills may actually make it into law sometime soon.