New Retirement Bill Would Boost RMD Age to 75

Sens. Ben Cardin, D-Md., and Rob Portman, R-Ohio, reintroduced legislation late Monday that would raise the required minimum distribution age from 70 ½ to 75 and also help workers pay off their student loans.

Cardin and Portman’s Retirement Security and Savings Act of 2019 overlaps with some provisions in the Retirement Enhancement and Savings Act (RESA) of 2019, which was introduced on April 1, but RESA only raised the RMD age to 72.

The RESA bill, introduced by Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking member Ron Wyden, D-Ore., is similar to H.R. 1994, the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, which is expected to get a vote on the House floor before Memorial Day weekend.

“Passage of RESA remains a top priority for Sen. Wyden and me,” Grassley said Tuesday, adding that he hopes the House “will send its version of RESA over to us this month.”

The Senate Finance Committee held a hearing Tuesday morning to explore the challenges in the retirement system.

Cardin stated during the Tuesday morning hearing that “the first priority is to get the RESA bill across the finish line as soon as possible.”

Rep. John Yarmuth, chairman of the House Budget Committee, has scheduled a hearing for Wednesday on ways to improve retirement security in America.

The Portman-Cardin bill phases in the RMD age increase over several years and would update mortality tables to reflect longer life expectancies.

The bill would also expand the ability of employer-sponsored 403(b) plans to offer collective investment trusts (CITs), a mutual fund-like vehicle used in some 401(k)s and pension plans that can help plan sponsors cut costs.

The Insured Retirement Institute, a lobbying group for the annuity industry, supports the bill. “Section 117 [of the bill] would level the playing field by providing insurance products with the same exemptions as CITs,” the group said in a letter to senators, sparking “a robust and competitive marketplace which is vital to ensure Americans have access to the appropriate savings option for their financial situation.”

The Portman-Cardin Retirement Security and Savings Act would also enable workers to make student loan payments while receiving employer-matching contributions into their retirement account “as if the student loan payments were salary contributions.”

The bill would also:

• Allow participants with Roth accounts in 457(b), 401(k), 401(a), and 403(b) plans to roll Roth IRA assets into these plans.
• Permit 457(b), 401(a), 401(k) and 403(b) plan participants to make qualifying charitable distributions, which under current law are only allowed from IRAs.

Student Loan Repayment Bill

Senate Finance Committee ranking member Wyden and four colleagues reintroduced similar legislation, the Retirement Parity for Student Loans Act, the same day.

Under current law, employers may only make matching contributions to a 401(k) retirement plan if employees are also making contributions.

The Retirement Parity for Student Loans Act — co-sponsored by by Sens. Maria Cantwell, D-Wash.; Cardin; Sheldon Whitehouse, D-R.I.; Maggie Hassan, D-N.H.; and Sherrod Brown, D-Ohio — would allow employers to make matching contributions to a retirement plan while their employees make student loan repayments.

For example, if an employee’s student loan payment is $500 and his or her employer matches 50% of retirement plan contributions, the employer would contribute $250 to the employee’s retirement account.

“Millions of college grads are buried under tens of thousands of dollars in student loan debt that prevents them from building their future — buying a home, saving for retirement and starting a family. The sooner workers start to save for retirement the better, and paying down student loans shouldn’t stop them from building their nest egg,” Wyden said. “While a comprehensive response to the student loan debt crisis is needed, this policy change is an important piece of the puzzle.”