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Neal, Brady Offer Bipartisan Tax Bill To Spur Retirement Savings

By Stephen Cooper · October 27, 2020, 7:40 PM EDT

The leaders of the House Ways and Means Committee introduced legislation Tuesday that includes a host of tax provisions intended to raise the level of retirement savings by working Americans.

The Securing a Strong Retirement Act, unveiled by committee Chairman Rep. Richard Neal, D-Mass., and ranking member Rep. Kevin Brady, R-Texas, aims to make it easier for Americans to start saving earlier in their lives in order to retire with long-term financial security, the lawmakers said in a statement announcing the bill's introduction.  

The legislation would strengthen a credit for nonprofit organizations that join multiple employer retirement plans and increase the saver's credit amount to $1,500 for contributions by individuals to a retirement plan or an individual retirement account, according to a summary provided by lawmakers. It would also provide a credit worth 100% of administrative costs for employers with up to 50 employees who start new retirement plans, the summary said.

Individuals could receive an employer match in their retirement plan for amounts paid to student loans under the bill, which would also create a national online database of lost retirement accounts for employees, according to the summary. The measure would increase the ability to make charitable gifts through a retirement plan and help military spouses save for retirement.

The legislation would require that Internal Revenue Code Sections 401(k) , 403(b) and startup plans to automatically enroll eligible participants with a minimum 3% contribution, the summary said. It would allow retirement plans not to recoup overpayments mistakenly made to retirees. 

The bill is an add-on to the $14.5 billion package of retirement savings incentives — the Setting Every Community Up for Retirement Enhancement Act — contained in the fiscal 2020 omnibus spending law signed by President Donald Trump in December.

Neal said the bill will help Americans retire with "confidence and dignity" after decades of working hard and making sacrifices. Brady called the bill a "bipartisan priority" that will protect Americans' retirement accounts as they plan for the future.

Wayne Chopus, president of the Insured Retirement Institute, said Congress still has time this year to work on the bill, which includes several elements from the institute's 2020 Federal Retirement Security Blueprint, such as raising the minimum distribution age to 75 and expanding retirement savings plans to nonprofit organizations.

"Congress is demonstrating once again that retirement security is a bipartisan issue in which leaders from both political parties focus on solutions to benefit workers and retirees," Chopus said in a statement.

--Additional reporting by Alan K. Ota. Editing by Neil Cohen.

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