Personal Finance

Proposed changes to retirement system get approval from Senate committee, setting stage for potential passage of 'Secure 2.0' this year

Key Points
  • The Senate Finance Committee approved the EARN Act, which contains some provisions that are included in the House-passed "Secure 2.0."
  • Another Senate committee last week approved a separate bill that, in conjunction with the EARN Act, form the Senate's version of Secure 2.0.
  • Differences between the Senate and House versions still need to be worked out before legislation could clear Congress and be signed into law by the president.
Samuel Corum/Bloomberg

The Senate Finance Committee on Wednesday unanimously approved a series of proposals that make full congressional passage of a retirement-improvement package more likely this year.

The measure, called the Enhancing American Retirement Now Act, contains some provisions that are the same as or similar to those proposed in the House, which passed the Securing a Strong Retirement Act (H.R. 2954) in late March in a bipartisan 414-5 vote.

Known as "Secure 2.0," that bill is intended to build upon the original Secure Act of 2019, which ushered in changes aimed at increasing retirement security by increasing access to workplace savings plans, among other efforts.

More from Personal Finance:
Cost to finance a new car hits a record $656 per month
How to get started building credit as a young adult
Stimulus checks rewired how some Americans see money

The EARN Act "includes more than 70 proposals aimed at helping more Americans save — the culmination of months of collaboration between just about every member of the committee, Democrat and Republican," said Finance Committee Chairman Ron Wyden, D-Ore., in opening remarks at the Wednesday hearing.

Committee approval of the EARN Act comes about a week after the Senate Health, Education, Labor and Pensions Committee advanced another retirement-related measure called the Rise & Shine Act (S. 4353). Together, the bills are the Senate's version of Secure 2.0.

Many provisions on the Senate side are the same as what cleared the House, including one to make it easier for employers to make contributions to 401(k) and similar workplace plans on behalf of employees who are making student loan payments instead of contributing to their retirement plan.

Managing your retirement account in a volatile market: Don't panic
Managing your retirement account in a volatile market: Don't panic

Other similarities between the two chambers' proposals include allowing older workers to save more through so-called catchup contributions to their 401(k) and raising the age when savers must begin taking required minimum distributions from their retirement accounts.

However, the differences between the two chambers' proposals would need to be worked out before full congressional approval could occur. Senate lawmakers said during the Wednesday committee hearing that they are in conversation with their peers in the House to reach agreement on a final version.