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Senators Present Text of Bipartisan Bill to Boost Retirement Savings

Jeff Carlson  

· 5 minute read

Jeff Carlson  

· 5 minute read

The top member from each party on the Senate Finance Committee—Chair Ron Wyden, Democrat of Oregon, and ranking Republican Mike Crapo of Idaho—have introduced the Enhancing American Retirement Now (EARN) Act (S.4808).

The new text of the bipartisan bill includes some changes to the original, including an income baseline to the revenue-raising provision concerning catch-up contributions being treated as contributions to a Roth individual retirement account. The revised provision specifies that employees with wages below $100,000 would be allowed to make catch-up contributions on a pretax or after-tax Roth basis. The changes would apply to tax years beginning after 2023.

In addition, the legislative language now includes a revenue-raising provision that would disallow a charitable deduction for a qualified conservation contribution if the deduction claimed is more than 2.5 times the sum of each partner’s relevant basis in the partnership, unless the contribution meets a three-year holding test.

The EARN Act includes about 70 retirement provisions and encourages small businesses to adopt retirement plans, makes it easier for part-time workers to participate in retirement plans, expands the saver’s credit for low- and middle-income workers, and allows penalty-free withdrawals during emergencies and family hardships such as natural disasters, domestic abuse, and terminal illness.

Other provisions of the $40 billion retirement package include:

  • enhanced tax credits for the cost of new plans (similar provision included in SECURE 2.0). For more information on SECURE 2.0 (H.R. 2954), see here.
  • a new “stretch match”—raising the employee contribution threshold to get the full employer match—safe harbor for 401(k) plans
  • reform of family attribution rules (similar to a provision in SECURE 2.0)
  • top-heavy relief for excludable employees (similar to a provision in SECURE 2.0)
  • allowing 401(k) safe harbors to replace SIMPLE plans mid-year, and
  • hardship distributions for emergencies.

“The Finance Committee has worked in a bipartisan way to improve the retirement system, building on our success in 2019,” Wyden said in a statement. “The EARN Act includes policies put forward by members on both sides of the aisle, and I appreciate the collaboration of Senator Crapo every step of the way.”

The Finance Committee most recently took action on retirement legislation on June 21 when it unanimously approved the EARN Act, but at that point no text for the bill had been drafted. The EARN Act is expected to be merged with legislation approved by the Senate Health, Education, Labor and Pensions Committee on June 14: the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg (RISE and SHINE) Act (S. 4353).

Those bills would then be reconciled with the SECURE 2.0 retirement bill already approved by the House of Representatives before going before the full chambers for a final vote and on to President Joe Biden to sign. Lawmakers remain optimistic Congress will act on the bill this year.


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