401K Match for Student Loan payments & new retirement income options may become reality in 2021
Americans saving for retirement faced an emotional roller coaster ride as COVID-19-related market volatility caused their retirement savings to fluctuate at a rate not seen since the Great Recession, leaving many to wonder if their long-term goals were in jeopardy. But in a rare instance of bi-partisanship, Congress seems to be in agreement on some meaningful solutions to help savers get back and stay on track.
Building on the momentum of 2019’s SECURE Act, the proposed Retirement Security and Savings Act (also known as SECURE Act 2.0), sponsored by Senators Rob Portman, R-OH, and Ben Cardin, D-MD, is currently taking shape in Washington with bipartisan support.
The president of Nationwide’s retirement plans business, Eric Stevenson, recently testified before a U.S. Senate subcommittee in favor of the legislation.
Of the many benefits created in the proposed legislation, Stevenson highlighted a few key provisions of the legislation:
- Allowing employers to provide a 401K match for employees’ qualified student loan payments
- Increasing the amount that workers over age 50 and 60 can make in “catch up” contributions
- Allowing for new, low-cost options to help retirees secure lifetime income through qualifying longevity annuity contracts
“One in four Americans aged 65 or older will live past the age of 90,” Stevenson said, emphasizing how the proposed Act’s provision to increase the required minimum distribution age for retirement savers to 75 will be a valuable benefit for those working and living longer.
“The Act will further enhance Americans’ ability to secure lifetime income through qualifying longevity annuity contracts (QLACs). With Americans living longer than ever, these products offer a low-cost way for retirees to protect against longevity risk.”
Stevenson highlighted challenges college grads face from student loan debt and the opportunity for businesses to alleviate some of that pressure by matching qualified loan repayment with retirement plan contributions.
“This provision of SECURE 2.0 would help workers who otherwise could not afford to make elective contributions to their retirement plan still take advantage of the employer match and begin or continue accumulating money for their retirement,” he said.
He also explained how the SECURE Act passed in 2019 is already opening doors for his company to support emerging retirement security needs. “We’re moving quickly to make lifetime income solutions enabled by the SECURE Act accessible to more people. We’ve begun rolling out a suite of In-Plan Annuities, which includes products that will provide guaranteed income in retirement or principal protection for public and private sector retirement plan participants,” he said.
Passage of the SECURE 2.0 is expected at some point in 2021.
Watch a replay of the Senate Committee Hearing.