National Association of Insurance and Financial Advisors

House Plans Vote on SECURE Act in Mid-May

The House of Representatives plans to vote on a retirement savings bill, H.R.1994, the NAIFA-supported SECURE Act, in May. The vote could come as early as the week of May 20. The SECURE Act is the new name for the retirement savings package that was first developed several years ago as the Retirement Enhancement Savings Act (RESA).
The SECURE Act would, among other things, remove restrictive current rules for multiple employer plans (MEPs); require annual plan participant statements to illustrate (using Department of Labor (DOL)-established assumptions) the amount of lifetime income, payable monthly, a plan participant might expect from his/her current account balance; ease portability of lifetime income (annuity) benefits by allowing in-kind trust-to-trust transfers; streamline discrimination rules; change the age at which required minimum distribution (RMD) rules are required from 70-½ to 72; and eliminate the current law age restriction (age 70) after which people can no longer contribute to traditional IRAs.
The bill also contains an offset provision, the “stretch IRA rule”, that is of concern. Under the rule, if it is enacted, those who inherit IRAs or 401(k) money would have to take distribution of that inherited money within 10 years of inheriting. The provision includes exceptions to that 10-year stretch rule—excepted from the rule would be surviving spouses, heirs who are disabled or chronically ill, minor children who inherit, and heirs who are within 10 years of the age of the decedent.
The SECURE Act as it was approved last month by the House Ways & Means Committee is bipartisan and widely supported. However, some controversy has developed in recent days. The bill as approved by Ways & Means contains a provision that would expand the allowable expenses of section 529 education account money for student loan repayment, apprenticeship programs, homeschooling expenses, and K-12 tuition. That triggered a fierce lobbying campaign (mostly by teachers in public schools) to remove the provision and that in turn has set up a difficult partisan problem.
House leaders, on both sides of the aisle, worked to find a resolution to this late-emerging problem that is acceptable to some Republicans but not all. The amended bill will retain the changes for expenses of student loan debt and apprenticeships but has stripped allowance of the home schooling and K-12 tuition expenses.
Once H.R.1994 passes the House, it will have to be taken up in the Senate. There, a largely similar but not identical bill, S.972—still named RESA—is pending. Differences between SECURE and RESA will have to be resolved for the measure to be enacted into law. Those differences include four principal areas:
SECURE (H.R. 1994) RESA (S. 972)
Includes a long-term part-timer rule that would require employers to allow their workers who have at least three years of service and who work at least 20 hours/week to participate in an employer-sponsored retirement plan (with discrimination rules modified to keep inclusion of part-timers from causing the plan to fail discrimination testing) No long-term part-timer rules
Includes the above-described homeschooling provision No homeschooling provisions
Includes a rule to provide a longer time for community newspapers to fund their pension plans No community newspapers provisions
10-year stretch IRA provision Stretch IRA provision would require distribution of inherited amounts (subject to identical exceptions) within five years, but with an additional exemption for inherited amounts of $400,000 per heir

Prospects: It seems likely that the SECURE Act will pass the House, although the homeschooling provision could delay the vote, and/or make acceptance of the bill by the Senate (where the same partisan divide exists, perhaps even more strongly) more difficult. Most insiders think the outstanding issues could cause enactment of the bill to be delayed until this fall. If so, supporters say they will try to add it to the fiscal-year-ending government funding bill. That bill will be needed prior to September 30, the end of this fiscal year.
NAIFA Staff Contact: Judi Carsrud – Assistant Vice President – Federal Government Relations, at   
  • Posted May 20, 2019 IN