The budget reconciliation proposal to be debated this week by the House Ways and Means Committee contains three game-changing retirement measures: a mandate requiring small business employers to offer employees a workplace savings plan work, a compulsory automatic enrollment function and a compulsory lifetime income distribution or annuity possibility.
The provision, called “Subtitle B,” will require small business employers to offer their employees a workplace savings plan, either in the form of an Individual Retirement Account (IRA) or an retirement plan, such as 401 (k), 403 (b) or SIMPLE IRA.
The measure also requires that automatic IRA and pension plans provide participants with an account balance of $ 200,000 or more the opportunity to receive a distribution of at least 50% of their acquired account balance in the form a protected life income solution or an annuity.
House Ways and Means Committee Chairman Richard E. Neal (D-Mass.) Announced yesterday that the committee will begin reviewing legislation that includes the proposals, as well as paid leave and requirements. health care and an expansion of Medicare benefits. Hearings begin tomorrow and continue on Friday.
“This is our historic opportunity to support working families and ensure that our economy is stronger, more inclusive and more resilient for generations to come,” Neal said in a statement.
“Requiring automatic contribution plans that give participants the flexibility to choose a lifetime income distribution option, rather than simply providing a lump sum distribution of retirement savings, particularly helps workers who may have difficulty distributing their savings. throughout their retirement years, “Wayne Chopus, president and CEO of the Insured Retirement Institute (IRI), said Tuesday in a letter to Neal. The commercial group represents the issuers of 95% of annuities in the United States
“This is especially true for retirees who are living longer than expected,” he continued. “A protected life income solution, such as an annuity, ensures a stable income for as long as a member can live. It offers valuable protection and can help retirees determine how they time their savings spending.”
Recent research from the IRI has shown that seven in ten workers aged 40 to 45 say they are very or somewhat likely to allocate part of their plan to pensions; 87% think it is important that savings income is protected for life; and 26% indicated that lifetime income is the most important feature of investing in retirement.
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