SECURE ACT 2.0 – Should We Get Excited?

By: Russ Kamp, Managing Director, Ryan ALM, Inc.

SECURE ACT 2.0 continues where the SECURE Act ended following its 2019 passage. There is a lot to this legislation We will be touching on various aspects of this legislation to discuss how it helps Americans in their quest to achieve a dignified retirement and where it might fall short.

In order to better understand aspects of this legislation, I reached out to my friend Kendra Isaacson, Pensions Policy Director and Senior Tax Counsel at Senate HELP Committee for Senator Patty Murray, Chair, who with other members of her team were able to shepherd through this legislation and get it included into the Congressional Omnibus Spending Bill. Kendra shared her favorite aspects of the bill, including the following: “I am the most excited about the pension-linked emergency savings accounts. Our theory is that this will draw lower-income, new participants in the retirement system who may have been nervous about locking their money up in a retirement plan.” I couldn’t agree more that this is an important step forward.

For years, I felt that DC offerings were nothing more than glorified savings accounts that were often raided by participants experiencing financial hardship. Having a “side pocket” for emergency purposes is an outstanding enhancement that hopefully encourages lower-wage earners to establish a retirement account. According to Kendra, “it is designed that employers would match into the associated defined contribution plan so participants can have an emergency savings account for short-term needs while working on their long-term retirement savings.” Again, this is a wonderful step forward IMHO.

I can assure you that there are individuals on both sides of the aisle that have great concerns about whether or not this legislation goes far enough. As stated earlier, we will continue to highlight the pros and cons in future blogs. Until then, let’s celebrate Kendra and her committee’s accomplishments.

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