On Wednesday May 5, 2021, the House Ways & Means Committee approved HR 2954, the Securing a Strong Retirement Act of 2021 (SSRA) with a unanimous vote. The bill is now ready to be considered by the full House and will be sent to the Senate.

The SSRA Act of 2021, as approved by the House Ways & Means Committee, includes the following provisions that would modify the requirements for employer-provided retirement plans, individual retirement accounts (IRAs), and other tax-favored savings accounts.

  • Generally, requires existing section 401(k) plans and section 403(b) plans with salary reduction agreements to provide for automatic enrollment with limited exceptions.
  • Increases the small retirement plan start-up credit, with a maximum credit of 100% (vs. the current 50%) for employers with no more than 50 employees.
  • Requires the Treasury Secretary to take steps necessary and appropriate to increase public awareness of the Saver’s Credit.
  • Permits 403(b) plans to structure their retirement plans as collective investment trusts.
  • Changes the required beginning date for RMDs from age 72 incrementally to begin at age 73, then 74 and finally to age 75.
  • Indexes IRA catch-up contributions for cost-of-living increases.
  • Provides an additional amount for catch-up deferral contributions for participants of certain employer retirement plans who are ages 62, 63, and 64.
  • Permits 403(b) plans to participate in multiple employer plan (MEP) arrangements.
  • Permits employers to match employee student loan payments with a contribution to the employee’s retirement plan, such as a 401(k) plan.
  • Provides for a tax credit to small employers who offer military spouses a retirement plan with enhanced eligibility rules and an accelerated vesting schedule.
  • Allows employers to provide small and immediate financial incentives to join and contribute to retirement plans, including 401(k) and 403(b) plans.
  • Provides a safe harbor for corrections of employee elective deferral failures.
  • Reduces from three years to two years the period of service requirement for long-term, part-time workers, and disregards pre-2021 service for vesting.
  • Removes RMD requirements for certain Life Annuities.
  • Protects individuals from efforts by plan sponsors to recover excess payments when the individual did not cause the overpayment.
  • Directs the Secretary of Labor to issue guidance that would allow plan administrators to use an alternative method for benchmarking target-date funds.
  • Requires the Departments of Treasury and Labor and the Pension Benefit Guaranty Corporation (PBGC) to report back to Congress with recommendations to streamline the reporting and disclosure requirements for employer-sponsored plans.
  • Reduces the excess accumulation penalty.
  • Increases the qualifying longevity annuity contract (QLAC) RMD exemption.
  • Expands the EPCRS program to cover IRA errors as well as employer sponsored plans. It would also allow the IRS to waive the excise tax for required minimum distributions when an IRA owner self-corrects the error within 180 days.
  • Requires the Secretary of Labor, the Secretary of the Treasury, and the Secretary of Commerce, in cooperation, to create an online searchable database known as the Retirement Savings Lost and Found (the “Lost and Found”) to find missing participants, that is to be managed by the PBGC.
  • Eliminates the “First Day of the Month” requirement for 457(b) plans.
  • Requires the Departments of Labor (DOL) and Treasury to issue regulations explaining fiduciary requirements for searching for missing participants.
  • Indexes for cost-of-living adjustments the amount eligible for qualified charitable distributions.
  • Expands the age 50 early distribution penalty exception for qualified public safety employees in governmental plans to apply also to qualified retirement plans and 403(b) plans.
  • Places a statute of limitations on assessments of IRA penalties when the taxpayer files his or her individual tax return.
  • Modifies the requirement under ERISA relating to the delivery of pension benefit statements to generally require that, for a defined contribution plan, at least one such statement with respect to an individual must be provided on paper in written form for each calendar year, unless the participant opts out of the paper requirement.
  • Permits employers to perform top-heavy tests separately for defined contribution plans covering excludable employees.
  • Limits the repayments of qualified birth or adoption distributions to a three-year period. Permits the plan administrator of a section 401(k) plan or a section 403(b) plan to rely on the employee’s certification. of a distribution due to an employee hardship, the plan administrator of a section 401(k) plan or a section 403(b) plan may rely on the employee’s certification.
  • Provides for domestic abuse victim distributions that would allow a domestic abuse victim to withdraw the lesser of $10,000 or 50 percent of their account without being subject to the 10 percent early distribution penalty tax. Domestic abuse victim distributions could be repaid to the plan over three years.
  • Modifies the family attribution rules.
  • Provides for an extension of time for sole proprietors to make elective deferrals to 401(k) plans for the year in which the section 401(k) plan is established.
  • Modifies the disqualification rule that applies when an IRA owner or beneficiary engages in a prohibited transaction so that only the portion of the IRA that is used in the prohibited transaction is treated as distributed to the individual.
  • Modifies Simplified Employee Pensions (SEPs) and SIMPLE IRAs so that they could be designated as Roth IRAs, so that contributions to a SEP or SIMPLE IRA that is a designated Roth IRA would not be excludable from income (employer contributions as well as elective deferrals).
  • Conforms the hardship distribution rules for 403(b) plans to those of 401(k) plans.
  • Allows for a 401(a) qualified plan, a 403(b) plan or a 457(b) plan to permit an employee to designate matching contributions as designated Roth contributions. An employer matching contribution that is a designated Roth contribution shall not be excludable from gross income.
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