House bill

House Bill supports 401(k) plans

The legislation raises contribution limits for older workers.

Under a bipartisan bill passed in the House, Americans could invest more in their 401(k) plans and sit on those nest eggs longer. The bill, which passed 414 to 5, aims to boost individual retirement savings by increasing contribution limits for older workers and allowing companies to offer employees a small cash bonus just for enroll in the pension plan.

House Majority Leader Steny Hoyer of Maryland said of the Securing a Strong Retirement Act: “By expanding automatic enrollment in employer-provided retirement plans, simplifying the rules for small businesses and helping those close to retirement save for longer, this legislation will help increase access to retirement funds and help families save for the future.

The law requires employers with 11 or more employees to automatically enroll eligible workers in 401(k) plans at a rate of 3% of salary, which would increase each year until the employee contributes 10% of salary.

The plan would also make changes to how much savers can contribute if they are nearing retirement and when retirees must withdraw money from their accounts. People aged 62, 63 and 64 could pay catch-up contributions of $10,000, up from $6,500 previously.

There are also incentives for young workers and an adjustment to the “retirement” age which increases over the next few years until in 2032 it reaches 75.

Student borrowers would also get a retirement boost from the legislation, which would essentially allow employers to match student loan repayments as retirement contributions.

There are two similar bills in the Senate dealing with retirement savings.

As the Lord guides you, pray with us…

  • For members of both chambers looking to promote investments in retirement savings.
  • For the wisdom of the Senate as it deliberates on the bills before it.
  • For working Americans determining their retirement savings strategy.

Sources: Wall Street Journal, CNBC