How the RISE Act Could Benefit Your Retirement Planning
On November 10, 2021, a U.S. House committee unanimously approved a bipartisan bill to help Americans more easily plan and save for a secure retirement. That’s welcome news to many people, including the roughly 55 million men and women across the country who do not have access to retirement benefits through their employer, according to government statistics.
Crafted by the House Education and Labor Committee, the bill is the Retirement Improvement and Savings Enhancement (RISE) Act of 2021 (H.R. 5891). The RISE Act aims to improve the retirement system not only for workers, but for employers and retirees as well.
For the Benefit of All
If you or someone you know are currently not participating in a retirement plan, then provisions in the RISE Act may help you feel more confident in saving for retirement through a company- or government-sponsored plan. The new provisions are meant to increase access to retirement plans, boost incentives for participating, and lower requirements to make participation easier.
Keeping up with new policies and regulations around retirement plans is important. When you have a firm understanding of changing legislation, you help ensure that your retirement savings are optimized for the policies and that you make the most of possible savings advantages.
Here are six key measures within the RISE Act:
- Access improved
Have you lost track of your pension or 401(k) plan? An online, searchable “Retirement Savings Lost and Found” database will be established at the Department of Labor to help you locate your hard-earned retirement savings as you move from one job to another. This database would enable retirement savers to search for the contact information of their plan administrator.
- Participation expanded
Another provision gives you more opportunity to invest in an employer’s retirement plan – and to do so confidently. Many charities, educational institutions and nonprofits offer 403(b) retirement plans. The RISE Act will allow these plans to participate in multiple employer plans (MEPs) and pooled employer plans (PEPs). Typically, MEPs and PEPs are maintained by two or more unrelated employers, which can provide their employees a tax-advantaged retirement savings plan while sharing administrative costs with their fellow members. This new provision opens eligibility to public school and tax-exempt organizations, a plus to you if you work at one.
- Cap increased
You will gain greater savings benefits with this measure: Employers will be able to transfer former employees’ retirement accounts from a workplace retirement plan into an Individual Retirement Account (IRA) if their balances are between $1,000 and $7,000. This provision increases the balance limit from $5,000 to $7,000.
- Incentives added
In this win-win for both employee and employer, employers will be permitted to offer small financial incentives – such as low-dollar gift cards – to boost employee participation in workplace retirement plans.
- Timeline shortened
You can participate in a retirement plan and start saving sooner under this provision, which reduces the requirement for part-time workers to participate in an employer’s retirement savings plan from three years of service with the employer to two years.
- Clarity enhanced
Do you have difficulty understanding your retirement plan’s reporting and disclosures? You’re not alone. In this provision, those requirements will be consolidated, simplified and standardized, bringing welcome clarity.
Toward a Secure Future
Understanding the RISE Act’s provisions and their potential implications can help you maximize the possible savings advantages. At the same time, be ready for additional measures. Members of the House Education and Labor Committee emphasized that the RISE Act is not the final word on their commitment to improve and expand access to a secure retirement. The bill is a continuation of the committee’s efforts to modernize retirement policy to benefit workers and job creators.
For help with your grasp of changing policies and guidance on retirement savings, the Key Investment Services team stands ready to assist you. Contact Key today.