Reconciliation of House and Senate Bills on Retirement Coming Soon

On June 14, the Senate Health, Education, Labor and Pensions (HELP) Committee approved the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (Rise & Shine) Act.

By making it through the committee, the bill can be considered by the full Senate, where it is likely to get tagged with similar efforts from the Senate Finance Committee. In the end, the anticipation is that this legislation would be paired with the House’s SECURE 2.0 bill.

In reality, these two pieces of legislation share only a narrow number of provisions.

  1. Allowing 403(b) plans to participate in MEPs and PEPs
  2. Reducing the requirement for part-time employees to participate in an employer’s savings plan from 3 years to 2 years

The most interesting of the provisions are not currently shared by both bills and are what will need to be negotiated in reconciliation.

  • Raising the limit on mandatory distributions from $5,000 to $7,000 (Rise & Shine)
  • Increasing the catch-up contribution limit for those ages 62-64 (SECURE 2.0)
  • Treating student loan payments as elective deferrals for purposes of calculating match contributions (SECURE 2.0)
  • Increase the MRD Age (SECURE 2.0)
  • Requiring at least one quarterly benefit statement to be delivered on paper per year (SECURE 2.0)
  • Implementing a retirement savings lost and found database (SECURE 2.0)

The differences between the two bills should not be overstated. Very few of these provisions are controversial, and most enjoy broad bipartisan support.

The primary area of political disagreement relative to retirement plan issues is clearly relative to ESG, where the Department of Labor’s (DOL) EBSA nominee has been held up as the debate over the inclusion or exclusion of ESG factors continues.

The HELP Committee rejected an amendment proposed by Senator Mike Braun (R-IN) that would have restricted plan fiduciaries from using non-pecuniary factors when considering plan investments. The language matches closely a rule enacted by the DOL under President Trump near the end of his term.

It would also appear that efforts are being made to clarify what restrictions (if any) may reasonably be placed on self-directed brokerage accounts in defined contribution plans. This is in response to recent DOL guidance related to cryptocurrency in retirement plans.

Given the bipartisan support, if the legislation isn’t held up by ESG or crypto concerns, there is optimism that legislation could be passed later this year.

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