On March 29, the House overwhelmingly passed H.R. 2954, the Securing a Strong Retirement Act of 2021 (“SSRA”), by a vote of 414-5. The below alert (also contained in a PDF here) contains Groom’s summary of the legislation as passed by the chamber.
The SSRA contains provisions from the version of the bill approved by the House Ways and Means Committee in May 2021 and from the Education and Labor Committee’s RISE Act (H.R. 5891) approved in November 2021.
The SSRA takes the bulk of its provisions from the Ways and Means version of the bill, including:
From the RISE Act, the legislation includes:
Provisions specific to governmental and tax-exempt plans in the merged bill include:
The version passed by the House did contain a few notable changes from the bills approved by the committees last year, including:
The SSRA now heads to the Senate, where the Finance and Health, Education, Labor and Pensions (“HELP”) Committees are working on their own legislation. Rather than accept the SSRA as sent over by the House, Finance and HELP Committee members will likely look to pull popular provisions from an assortment of retirement bills that have been introduced in the Senate, including measures by Finance Chairman Ron Wyden (D-OR), HELP Chairwoman Patty Murray (D-WA), and Senators Ben Cardin (D-MD) and Rob Portman (R-OH). The Finance Committee currently plans to hold a markup of its bill later this spring.
It is unclear whether the Senate will pass a retirement bill this year. As demonstrated by the SSRA’s vote, however, there is clearly bipartisan support for many of the measures currently under consideration. Further, some key retirement champions have announced that they will retire at the end of the year, which may be an impetus for passage. As was the case in past efforts to enact retirement legislation, the best chance for enactment likely will be through hitching a ride on a must-pass, year-end package.
For a PDF of the below table, please click here.
| Bill Section | Current Law | House-Passed Text |
| Sec. 101. Expanding automatic enrollment in retirement plans | Automatic enrollment and automatic escalation may be used by 401(k) and 403(b) plans, but are not currently required. |
| Bill Section | Current Law | House-Passed Text |
| Sec. 201. Remove required minimum distribution (“RMD”) barriers for life annuities | All annuity payments must be nonincreasing or only increase following the limited exceptions. One exception is for annuity contracts purchased from insurance companies, which permits increases that meet an actuarial test. The current annuities actuarial test does not permit certain guarantees such as certain guaranteed annual increases, return of premium death benefits, and period certain guarantees for participating annuities. | Amends the RMD rules to relax these rules and permits commercial annuities that are issued in connection with any eligible retirement plan to provide additional types of payments, such as certain lump sum payments and annual payment increases at a rate less than 5% annually. Effective upon enactment. |
| Sec. 202. Qualifying longevity annuity contracts (“QLACs”) | Existing regulations limit the premiums an individual can pay for a QLAC to the lesser of $135,000 or 25% of the individual’s account balance. It also provides for other restrictions on non-spouse death benefits. | Eliminates the 25% requirement. Clarifies that a divorce occurring after a QLAC is purchased but before payments begin will not affect the permissibility of the joint and survivor benefits under the contract. Further clarifies that employees may rescind a contract during the 90-day trial period (“short free look period”). Generally effective for contracts purchased on or after enactment. For joint and survivor annuity contracts and the short free look period, the provisions are effective for contracts purchased on or after July 2, 2014. |
| Sec. 203. Insurance-dedicated exchange-traded funds (“ETF”) | The investment assets held in the segregated asset account for a variable annuity or life insurance contract must be adequately diversified. If the assets are not adequately diversified, the variable contract is not treated as an annuity or life insurance contract. | Directs the Secretary of the Treasury to revise the regulations setting forth diversification requirements with respect to variable contracts to facilitate the use of ETFs. Effective for investments made on or after the date that is seven years after the date of enactment. |
| Bill Section | Current Law | House-Passed Text |
| Sec. 301. Recovery of retirement plan overpayments |
| Bill Section | Current Law | House-Passed Text |
| Sec. 401. Amendments relating to Setting Every Community Up for Retirement Enhancement Act of 2019 | 1. Clarifies that the increase in the age on which the required beginning date for required minimum distributions is based (to age 72) does not change the general requirement to actuarially increase the accrued benefit of an employee who retires in a calendar year after the year the employee attains age 70½ (other than a five-percent owner) to take into account the period after age 70½ in which the employee was not receiving any benefits under the plan. 2. Clarifies that the excise tax on excess contributions to an IRA generally does not apply to difficulty of care payments contributed to an IRA. 3. Corrects a cross-reference relating to QBADs distributed from 403(b) plans. 4. Clarifies the rules for meeting safe harbor contributions (including QACAs) via other plans, including the applicable notice requirement for safe harbor matching contributions. 5. Clarifies that long-term part-time workers satisfying the 500 hours per year requirement can be excluded from safe harbor matching contributions. Effective as if included in the section of the SECURE Act to which the amendment relates. |
| Bill Section | Current Law | House-Passed Text |
| Sec. 501. Provisions relating to plan amendments | Current law generally requires plan amendments to reflect legal changes to be made by the tax filing deadline for the employer’s taxable year in which the change in law occurs (including extensions). The Code and ERISA provide that, in general, accrued benefits cannot be reduced by a plan amendment (the “anti-cut-back rule”). Individually designed plans have the Required Amendment List that provides some additional time for amendments. | Allows plan amendments made pursuant to this bill to be made by the end of the 2024 plan year (2026 plan year in the case of governmental plans and collectively bargained plans) as long as the plan operates in accordance with such amendments as of the effective date of a bill requirement or amendment. If a plan operates as such and meets the amendment timeline and requirements of this bill, then the plan will be treated as being operated in accordance with its terms, and the amendment will not violate the anti-cutback rule (unless so designated by the Secretary). Extends the plan amendment deadlines under the SECURE Act, CARES Act, and Taxpayer Certainty and Disaster Relief Act of 2020 to these new remedial amendment period dates. Effective upon enactment. |
| Bill Section | Current Law | House-Passed Text |
| Sec. 601. Simple and SEP Roth IRAs | Unlike 401(k), 403(b), and governmental 457(b) plans, SIMPLE IRAs and SEPs are not permitted to offer a Roth option. Instead, all contributions must be pre-tax. | Under the proposal, a SEP and a SIMPLE IRA are permitted to be designated as Roth IRAs (and the Roth IRA contribution limits are adjusted accordingly). Effective for taxable years beginning after December 31, 2022. |
| Sec. 602. Hardship withdrawal rules for 403(b) plans | Prior to the Bipartisan Budget Act of 2018 (“BBA”), the hardship rules for 401(k) plans and 403(b) plans were generally the same. The BBA created some differences, primarily allowing 401(k) plans to make hardship distributions from more contribution sources, such as qualified nonelective contributions (“QNECs”), and earnings on elective deferrals instead of just from employee deferrals. | Conforms the hardship distribution rules for Section 403(b) plans to those of Section 401(k) plans. Therefore, a 403(b) plan may distribute QNECs, qualified matching contributions, and earnings on any of these contributions (including elective deferrals). Also confirms that distributions from a 403(b) plan are not treated as failing to be made upon hardship solely because the employee does not take available loans. Effective for plan years beginning after December 31, 2022. |
| Sec. 603. Elective deferrals generally limited to regular contribution limit | Section 401(k), 403(b), and governmental 457(b) plans may permit employees to make catch-up contributions (if age 50 or older), subject to certain limitations. | Requires a Section 401(a) qualified plan, Section 403(b) plan, and governmental Section 457(b) plan that permits catch-up contributions to designate the catch-up contributions as Roth contributions. The proposal does not apply to SIMPLE IRAs or SEP plans. Effective for taxable years beginning after December 31, 2022. |
| Sec. 604. Optional treatment of employer matching contributions as Roth contributions | Current law does not permit employer matching contributions to be made on a Roth basis. | Allows a Section 401(a) qualified plan, a Section 403(b) plan, or a governmental 457(b) plan to permit employees to designate matching contributions as Roth contributions. Student loan matching contributions may also be designated as Roth contributions. Matching contributions designated as Roth contributions are not excludable from the employee’s income. Effective for contributions made after enactment. |