Hopes high for ‘SECURE 2.0’ retirement bill during lame-duck session 

The House and Senate returned for a postelection session of Congress this week with a broad array of bipartisan health care measures and a big “SECURE 2.0” retirement bill on the agenda. Lawmakers are hopeful that some of these items can get through Congress before the end of the year, although short deadlines and postelection uncertainty cloud the outlook. The Senate will remain in Democratic hands next year, while Republicans have narrowly won control of the House more than a week after election day and several races are still uncalled.

“SECURE 2.0” is a shorthand term describing follow-up legislation to the SECURE Act of 2019. The House passed a sprawling package of retirement changes early this year by a wide bipartisan margin, and two Senate committees unanimously passed similar bills months later.

Key lawmakers are now racing to finish blending these three bills into a final product. Nearly all differences have been resolved, they say, and while a few notable discrepancies remain, motivation is strong in both parties and both chambers to find common ground and wrap up a SECURE 2.0 measure in this Congress.  

Part of the push is due to the recognition that some major retirement policy players are not returning to Congress next year, including Representative Kevin Brady (R-TX), Ranking Member on the House Ways and Means Committee, and Senator Rob Portman (R-OH), a senior member of the Senate Finance Committee. Neither ran for reelection. Another important retirement policy leader – current Ways and Means Committee Chair Richard Neal (D-MA) – will lose his gavel next year. These and other changes in personnel and committee line-ups could make it much harder to pass a comprehensive retirement bill like SECURE 2.0 next year.

A final SECURE 2.0 measure is unlikely to pass as a standalone bill, however, and its chances (and that of other health care and tax items) rest on being attached to a government spending agreement that needs to pass by December 16 to avert a government shutdown. That may not materialize if Congress decides to pass a temporary extension and resume spending debates next year. But Mercer and others, including plan sponsor groups such as the American Benefits Council, the ERISA Industry Committee and the U.S. Chamber of Commerce are urging Congress to get the job done now.

There are many provisions in the legislation for which Mercer and the retirement policy community have expressed strong support, including:

• Enhanced catch-up contributions for older workers
• The ability to self-correct inadvertent plan errors without a submission to the IRS
• Enhancements to 403(b) plans including allowing investments in collective trusts
• Permitting employer matching contributions tied to student loan repayments
• Extending and improving the ability of plan sponsors to use surplus defined benefit pension assets for retiree health and life insurance
• Addressing emergency savings
• Ceasing the indexing of the Pension Benefit Guaranty Corporation variable rate premium

Some of the proposals that have raised concerns and questions among plan sponsors include:

• Changes to the electronic delivery rules
• Creation of a retirement account “Lost and Found” registry without a fiduciary safe harbor for what employers must do to find missing participants
• Requiring catch-up contributions to be in a Roth form

Two major issues that lawmakers must still resolve are whether to adopt the House bill’s requirement that nearly all new plans adopt automatic enrollment and escalation features, and a Senate proposal that would substantially expand the current Saver’s credit that helps middle-income taxpayers put money away by making the credit refundable and payable only to eligible individuals’ workplace retirement plans or IRAs. Lawmakers are suggesting that both proposals could be included in a final measure. The next few weeks should provide a clearer picture of what to expect.