Congress Passes IRA And 401K Reform

Dated: 06/03/2019

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In August, President Trump took steps to address the situation, issuing an executive order requesting a review of what can be done to expand retirement savings plans. Part of that order included an analysis of the age requirement that determines when an individual can withdraw from a retirement account. As as a result the House of Representatives passed a bipartisan bill on May 25th significantly improves Americans’ ability to save for retirement by making it easier for employers to offer 401(k)s and for employees to live off those balances in their later years.


The bill, which will now move on to the Senate, with the greatest changes to the nation’s retirement system in 13 years. As the general population continues to age and the nation braces for a wave of retirees, lawmakers are acutely aware of the stress this silver tsunami could place on the federal budget. Numerous studies show that a significant portion of the population has little to nothing saved for retirement. In fact, a survey released earlier this month by Freedom Debt Relief shows that 41% of Americans say that haven’t saved a single cent for retirement – this as health care costs continue to rise.


Currently, retirees must begin taking withdrawals at age 70.5, but that age was based on life expectancy tables generated in 2002, and average life expectancy has risen 1.5 years since that time. According to the White House, updating the required minimum distribution age would allow Americans to spread their retirement savings over a longer period of time. This bill, which passed by overwhelming majority in the House, proposes an increase to age 72, and also includes provisions that encourage 401(k)-type plans to offer annuities, which would provide a guaranteed monthly income stream for retirees. The bill also grants small businesses the ability to join together to offer their workers retirement plans – another move proposed in Trump’s executive order.


Currently, rules dictate that only related business can band together to offer a multiple employer plan. This bill would remove the stipulation that there must be an affiliation between the companies. The bill also includes features that would benefit part-time workers, home-care workers, small business employees and parents.

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Kurt Galitski DRE#01348644

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