The Retirement Enhancement and Savings Act (RESA) has been reintroduced in the new Congress.
The bill introduced on Feb. 6 is bipartisan – sponsored by Reps. Ron Kind (D-WI) and Mike Kelly (R-PA) – as was the one introduced nearly a year ago by the same duo.
The bill, which is a replica of last year’s bill except for changes in effective dates and other technical changes, includes provisions intended to improve the retirement plan options available to small businesses by allowing unrelated employers to adopt a multiple employer plan (MEP). The legislation would give employers additional time to adopt a qualified retirement plan for the prior year up until the due date of the tax return (with extensions). The legislation provides for greater flexibility for a business to adopt a safe harbor 401(k) plan. The bill reduces the premiums charged to cooperative and small employer charity (CSEC) pension plans like the ones sponsored by some rural electric and agricultural cooperatives and the Girl Scouts.
The bill provides a tax credit of up to $5,000 to defray the cost of starting a retirement plan and adds an additional tax credit for plan designs with an automatic enrollment feature. It also enhances automated saving by removing the 10% cap on automatic employee contribution rate increases.
The bill introduced in the last Congress was, in turn, identical to a companion bill in the Senate, S. 2526, which was resurrected last March by Sens. Orrin Hatch (R-UT) and Ron Wyden (D-OR) – then the leaders of the Senate Finance Committee. (Wyden remains the ranking member; Hatch retired at the end of the last Congress.) That bill received unanimous bipartisan support in the committee but was never taken up by the full Senate. The new Chairman of the committee, Sen. Chuck Grassley (R-IA), is expected to team up with Wyden to reintroduce a Senate version of RESA in the coming weeks.
Text of the Retirement Enhancement and Savings Act is available here.
Andrew Remo is the American Retirement Association’s Director of Legislative Affairs.