New legislation focusing on retirement savings attempts to build on SECURE Act

SECURE Act

As you probably remember, last year President Trump signed into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019.  The SECURE Act was a far-reaching and bi-partisan effort aimed at increasing access to tax-advantaged accounts and preventing older Americans from outliving their savings.  A few of the major components of the SECURE Act included:

  • Pushing back the age at which retirement plan participants need to take required minimum distributions from 70 ½ to 72.
  • Repealing the maximum age for traditional IRA contributions.
  • Allowing individuals to use 529 plan money to repay student loans.
  • Allowing penalty-free withdrawals from retirement plans for birth or adoption expenses.

Securing a Strong Retirement Act of 2020

Just last month, Congressmen Richard Neal (D-Mass) and Kevin Brady (R-Texas) introduced the Securing a Strong Retirement Act of 2020.  This new legislation attempts to build on the momentum from last year’s SECURE Act to encourage retirement savings. A few highlights of this new bill include:

  • Promoting saving earlier for retirement by expanding automatic enrollment in retirement plans.
  • Pushing back further the age at which retirement plan participants need to take required minimum distributions from 72 to 77.
  • Increasing catch-up contributions for those age 60.
  • Treating student loan payments as elective deferrals for purposes of matching contributions.

A copy of the Securing a Strong Retirement Act of 2020 and section-by-section summary of the bill can be found in the attached press release by the Ways & Means Committee:

https://waysandmeans.house.gov/media-center/press-releases/neal-and-brady-introduce-new-bipartisan-legislation-strengthen-americans

Moving forward

It is unclear if this legislation will pass next year in a possibly deeply-divided Congress.  But it appears there is consensus among both parties to help Americans save for retirement.   We will continue to monitor Congress’s progress with this new important piece of legislation.

New Supreme Court ruling may affect employee benefit plans

As you probably already know, the Supreme Court issued several important decisions during this year’s term. One of the most ground-breaking was their decision in Bostock v. Clayton County holding that Title VII of the Civil Rights Act of 1964 protects transgender, gay and lesbian employees from workplace discrimination based on their sexual orientation or sexual identity. You can find the decision here: https://www.supremecourt.gov/opinions/19pdf/17-1618_hfci.pdf

While Bostock applied to the termination of a LGBT employee, we should carefully consider its potential impact on employee benefit plans.  To get a sense of where this rapidly evolving nondiscrimination law may be headed, this blog post provides of a snapshot of the legal framework prior to Bostock and some specific considerations for benefit plan professionals after Bostock.

Pre-Bostock background:

As you may recall, in 2016 the HHS issued nondiscrimination regulations under Section 1557 of the ACA that generally prohibited discrimination on the basis of race, color, national origin, sex, age or disability under health programs or activities that receive HHS funding. These regulations interpreted Section 1557 to prohibit discrimination “on the basis of sex” to include discrimination based on transgender status, gender identity or gender expression in healthcare to include certain health plans.

But just this June, HHS issued revised the Section 1557 nondiscrimination regulations and significantly changed the prior regulations. Importantly, the regulations repealed the prior regulations that defined discrimination “on the basis of sex,” to include discrimination based on gender identity. Further, these new regulations made clear that Section 1557 does not apply to employer-sponsored group health plans that do not receive HHS funding and are not principally engaged in the business of providing healthcare.

Post-Bostock considerations:

Now that the U.S. Supreme Court has ruled that employers violate Title VII (of course, different and separate from 1557 under the ACA) when they discharge employees based on sex, the impact that this decision could have on employee benefit plans remains to be seen. It is clear that employers should use caution when considering benefit plan provisions that may treat employees differently based on sex, including their sexual orientation or transgender status. At a minimum, special care should be made to review relevant plan/coverage terms, including those pertaining to gender dysphoria, gender-affirmation surgery or mental health benefits, as well as plan terms covering same-sex spouses and same-sex domestic partners.

Please let us know if you have any questions.