Keith Mack
Congress has the power to change laws regarding retirement savings plans, and has done so on several occasions. In 2018, the Retirement Enhancement and Savings Act was passed, which revised the required distribution rules for pension plans and increased penalties for failing to file tax or retirement plan returns. In 2022, the SECURE Act 2.0 became law, which provided assistance for retirement savers, small businesses and many others. Most recently, in December 2023, Congress enacted several changes to retirement savings accounts, including expanding saving opportunities for taxpayers by allowing additional catch-up contributions for workers approaching retirement.
| Characteristics | Values |
|---|---|
| Can Congress change laws regarding retirement savings plans? | Yes |
| Recent changes | The SECURE Act 2.0, which became law in 2022, provides assistance for retirement savers, small businesses and many others |
| Previous changes | The 2019 SECURE Act shook up retirement funding and planning |
| Previous changes | The Retirement Enhancement and Savings Act of 2018 revised the required distribution rules for pension plans |
| Previous changes | The omnibus spending package in December 2023 included several changes to retirement savings accounts, including expanding saving opportunities for taxpayers and offering a new type of emergency savings account |
| Future changes | Simplifying and expanding savings and retirement options for taxpayers, for example by creating Universal savings accounts (USAs) |
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What You'll Learn
The SECURE Act 2.0
Congress can and does change laws regarding retirement savings plans. In fact, the SECURE Act 2.0, which became law in 2022, is a follow-up to the 2019 SECURE Act, which itself shook up retirement funding and planning.
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Retirement Savings Contributions Credit
Congress can and does change laws regarding retirement savings plans. In December 2022, the SECURE Act 2.0 became law, which included changes to retirement savings accounts, such as allowing additional catch-up contributions for workers approaching retirement, adopting automatic enrolment for certain retirement accounts, reforming the saver's credit, and offering a new type of emergency savings account. The changes are set to benefit a wide range of Americans saving for retirement through IRAs or employer plans such as 401 (k)s. The new law is a follow-up to 2019's SECURE Act, which also shook up retirement funding and planning.
The Retirement Savings Contributions Credit, also known as the saver's credit, is available to low- and moderate-income workers. The SECURE Act 2.0 requires the Treasury Secretary to take steps to increase public awareness of the credit.
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403(b) retirement plans
Congress can change laws regarding retirement savings plans. In fact, in 2022, the SECURE Act 2.0 became law, and the new rules provide assistance for retirement savers, small businesses and many others. The changes are so wide-ranging that many of them won't officially begin until 2024 or later.
One of the retirement savings plans that Congress can change laws regarding is the 403(b) retirement plan. A 403(b) plan is a retirement plan offered by public schools and certain 501(c)(3) tax-exempt organisations, such as churches and other faith-based organisations. It is also known as a tax-sheltered annuity or TSA plan. Employees can save for retirement by contributing some of their salary to the plan, and employers can also contribute to employees' accounts.
A 403(b) plan is similar to a 401(k) plan, which is maintained by a for-profit entity. Both plan types offer tax-deferred growth. However, the major difference is the types of businesses that offer them. 401(k) plans are generally available to employees of for-profit companies, while 403(b) plans are offered by public education institutions and certain tax-exempt organisations.
A 403(b) plan can be an excellent way to help build retirement security, whether it is an individual's only option for retirement saving or it is supplementing another retirement account. It is easy to save through payroll deduction, and individuals can choose how much to save, subject to applicable IRS limits. Savings amounts can be adjusted as needs change, and it may reduce taxable income.
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Emergency savings accounts
Congress can and does change laws regarding retirement savings plans. In December 2022, the SECURE Act 2.0 became law, which will benefit a wide swath of Americans saving for their retirement through IRAs or employer plans such as 401 (k)s. The new law provides assistance for retirement savers, small businesses and many others.
The changes are so wide that many of them won't officially begin until 2024 or later. One of the changes includes offering a new type of emergency savings account. The Retirement Savings Contributions Credit, also known as the saver's credit, is available to low- and moderate-income workers.
The Retirement Enhancement and Savings Act of 2018 revised the required distribution rules for pension plans, increased penalties for failing to file tax or retirement plan returns, and required the Internal Revenue Service to share returns and return information with the US.
Lawyers at Seyfarth have said that although there is bipartisan support for the SECURE Act 2.0, it is likely that the provisions will be modified as the bill makes its way through Congress.
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Universal savings accounts
Congress has the power to change laws regarding retirement savings plans, and has done so on several occasions. In 2017, the 115th Congress proposed the Retirement Enhancement and Savings Act, which aimed to revise the required distribution rules for pension plans and increase penalties for failing to file tax or retirement plan returns. In 2019, the SECURE Act was passed, which shook up retirement funding and planning. The SECURE Act 2.0 became law in 2022, and provided assistance for retirement savers, small businesses, and many others.
The changes made by Congress to retirement savings plans have been wide-ranging. They have included expanding saving opportunities for taxpayers by allowing additional catch-up contributions for workers approaching retirement, adopting automatic enrollment for certain retirement accounts, and offering a new type of emergency savings account.
One proposal for simplifying and expanding savings and retirement options for taxpayers is the introduction of Universal Savings Accounts (USAs). USAs would reduce the tax code's penalties for saving, without micromanaging behaviour or confusing taxpayers. They would provide a simple set of rules that encourage saving generally for all taxpayers and for any purpose.
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Frequently asked questions
Yes, Congress can and does change laws regarding retirement savings plans.
The SECURE Act 2.0 is a new law that provides assistance for retirement savers, small businesses and many others. It was passed in 2022 and the changes will be phased in over the next few years.
The SECURE Act 2.0 has made a number of changes, including:
- Extending some of the design features of 401(k) plans to 403(b) retirement plans.
- Eliminating certain barriers to offering lifetime income annuities as a retirement plan investment option.
- Requiring the Treasury Secretary to take steps to increase public awareness of the Retirement Savings Contributions Credit (also known as the saver's credit), which is available to low- and moderate-income workers.
The Retirement Enhancement and Savings Act of 2018 revised the required distribution rules for pension plans, increased penalties for failing to file tax or retirement plan returns, and required the Internal Revenue Service to share returns and return information with the U.S.
Congress has made a number of other changes to retirement savings plans, including:
- Expanding saving opportunities for taxpayers by allowing additional catch-up contributions for workers approaching retirement.
- Adopting automatic enrollment for certain retirement accounts.
- Reforming the saver’s credit.
- Offering a new type of emergency savings account.
