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Monday, July 16, 2018  
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Bipartisan Bill Helps Americans Save for Retirement

Scott Bilker Scott Bilker is the founder of DebtSmart.com and author of the best-selling books, Talk Your Way Out of Credit Card DebtCredit Card and Debt Management, and How to be more Credit Card and Debt Smart. Receive the 5-Year Loan Spreadsheet when you subscribe to his email newsletter.

U.S. Reps. Vern Buchanan, R-FL, and Ron Kind, D-WI, has introduced the “Retirement Security Act of 2015” —  bipartisan legislation that makes it easier for small employers to offer retirement plans while creating incentives for employees to save more for the future.

“Too many Americans are entering their golden years without adequate financial security,” Buchanan said.  “This bipartisan, common-sense legislation will help hardworking men and women save for a comfortable retirement.  As an employer myself for over 30 years, I have seen firsthand how costly and complex it can be to establish retirement plans such as 401(k)s.  Government should be encouraging employers to do right by their employees and help them save for retirement – not discouraging them.”

Buchanan noted that nearly one in three seniors in Florida – more than 750,000 people – rely on Social Security for at least 90 percent of their income.  Yet this program provides an average annual benefit of less than $16,000 per year.

 “The bipartisan Retirement Security Act will help employers and workers alike. A comfortable retirement is something everyone seeks to achieve, but for many small businesses, setting up a retirement savings plan can be a complicated and costly process,” said Rep. Kind. “By making it easier for small businesses to offer savings plans and offering incentives to employees who save more of their earnings, more workers can build up their retirement savings and more small businesses can attract and retain employees.”

Buchanan said he worked with Sen. Susan Collins, R-ME, in drafting the legislation to give it the best possible chance of passing both the House and Senate this Congress.

More than 39 million people nationally work for small businesses that do not offer retirement plans.  The Retirement Security Act would make it less costly and complex for these individuals’ employers to offer retirement benefits.  It also ensures that low- and middle-income individuals can more easily claim existing tax incentives for retirement savings.

The Retirement Security Act (H.R. 557) is supported by the U.S. Chamber of Commerce, theAmerican Council of Life Insurers, American Benefits Council and Principal Financial Group

The Retirement Security Act of 2015 would:

  • Encourage small businesses to offer retirement plans by reducing cost and complexity.  The bill would allow businesses with up to 500 employees to join multiple employer plans (MEPs) in order to share the administrative burden of a retirement plan.  The bill also directs Treasury to issue regulations that protect businesses participating in a MEP from disqualification of the entire MEP due to the violations of another participating business. In addition, the bill reduces costs for all businesses by authorizing the Treasury Department to simplify, clarify, and consolidate notice requirements for retirement plans.
  • Create incentives for employees to save more by enhancing automatic enrollment.  Many retirement plans using automatic enrollment are written to comply with “safe harbors” in the tax code.  Current safe harbors effectively cap at six percent the amount of pay that an employee can contribute to a 401(k) plan while receiving an employer “match.” The bill would create an additional, optional safe harbor that would allow employees to receive an employer match on contributions of up to ten percent of their pay, and would increase default employee contributions up to 10%.  For the smallest businesses that choose to adopt this new safe harbor, the bill helps offset the cost of this additional match with a new tax credit.
  • Ensure that low- and middle-income taxpayers have easy access to existing incentives to save.  The tax code currently provides a non-refundable “saver’s” credit to low- and middle-income individuals who contribute to IRAs or employer-sponsored retirement plans.  Yet the credit cannot be claimed on a Form 1040EZ, which is a simple form used by taxpayers who have less than $100,000 in incomeand do not have complicated tax issues. The bill would direct Treasury to make the saver’s credit available on Form 1040 EZ.
This entry was posted in Financial Planning. Bookmark the permalink. Read more articles by Scott Bilker. (Also see articles by all authors and articles in all categories.)



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