Securing a Strong Retirement Act of 2022
Mar 30, 2022
Introduced: May 4, 2021
Last updated: Mar 30, 2022
Mar 30, 2022
Introduced: May 4, 2021
Last updated: Mar 30, 2022
Summary
Helps people save more for retirement by making it easier to join plans, increasing savings limits, and changing some rules for retirement accounts.
What problem does this solve?
Many people are not saving enough for retirement because the rules can be confusing and plans are not always easy to join. This bill makes more retirement plans automatically enroll workers and offers new ways for employers to help them save for the future.
What does this bill do?
Automatic enrollment in new retirement plans
Requires most new 401(k) and 403(b) plans to automatically enroll employees at a contribution rate of at least 3%, which increases over time.
Reference
Text:
Section:
Sec. 106
Header:
Increase in age for required beginning date for mandatory distributions
Increases age for required minimum distributions (RMDs)
Gradually raises the age when people must start taking money from their retirement accounts from 72 to 73, then to 74, and finally to 75.
Higher catch-up limits for older workers
Allows individuals aged 62, 63, and 64 to make larger catch-up contributions to their retirement plans, up to $10,000 per year for most plans.
Reference
Text:
Section:
Sec. 111
Header:
Treatment of student loan payments as elective deferrals for purposes of matching
Matching contributions for student loan payments
Lets employers make matching contributions to an employee's retirement account based on the employee's student loan payments, even if the employee isn't contributing to the plan.
Creates a retirement 'lost and found' database
Directs the Department of Labor to create a national, online database to help people find retirement accounts they may have lost track of from previous jobs.
Enhances the Saver's Credit for low- and middle-income workers
Changes the tax credit for saving for retirement to a single 50% rate and modifies the income levels, making it simpler and potentially more valuable for eligible savers.
Improves coverage for part-time workers
Reduces the time long-term, part-time workers must wait to be eligible for their company's retirement plan from three years of service to two.
Reference
Text:
Section:
Sec. 603
Header:
Elective deferrals generally limited to regular contribution limit
Requires catch-up contributions to be Roth for high earners
Mandates that all catch-up contributions for employees must be made to a Roth account, meaning they are taxed upfront.
Reference
Text:
Section:
Sec. 604
Header:
Optional treatment of employer matching contributions as Roth contributions
Allows employer matching contributions to be treated as Roth
Gives employers the option to let employees choose to have their matching contributions put into a Roth account, where they would be taxed now but grow tax-free.
Reference
Text:
Section:
Sec. 102
Header:
Modification of credit for small employer pension plan startup costs
Increases tax credits for small business retirement plans
Increases the tax credit for small businesses starting a retirement plan and adds a new credit for employer contributions for the first few years.
Who does this affect?
- Employees
- Employers
- Retirement Savers
What is the real world impact?
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Boosts national retirement savings
Encourages more people to save by requiring many new plans to automatically sign up employees and by increasing the amounts older workers can contribute. This helps address concerns that many Americans are not prepared for retirement.
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Simplifies retirement rules for businesses
Makes it easier for employers, especially small businesses, to offer retirement plans by creating new tax credits and providing clear, safe ways to fix common administrative mistakes without big penalties.
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Shifts tax revenue to the present
Requires catch-up contributions for higher earners to be made with after-tax Roth dollars. This means the government collects tax revenue now instead of when the person retires, which helps offset the bill's costs in the short term.
When does this start?
The provisions in this bill take effect on various dates, with many applying to plan or tax years beginning after December 31, 2022 or 2023.
Automatic Enrollment Requirement
Applies to new retirement plans for plan years beginning after December 31, 2023.
Increased RMD Age
Applies to distributions required after December 31, 2022, for individuals who turn 72 after that date.
Higher Catch-Up Limits
Applies to taxable years beginning after December 31, 2023.
Student Loan Payment Matching
Applies to employer contributions made for plan years beginning after December 31, 2022.
Enhanced Saver's Credit
Applies to taxable years beginning after December 31, 2026.