Senate Finance Committee Advances Retirement Legislation

On June 22, 2022, the Senate Finance Committee voted unanimously to advance the Enhance American Retirement Now (EARN) Act. This bill is aimed at making it easier for Americans to save for retirement as it is estimated that between 40 and 60% of Americans either have no retirement or have not saved enough. The bill has more than 70 proposals after months of collaboration with every member of the committee.

Included in the bill are proposals for:

Individual Retirement Accounts – There are many proposals listed in this section including allowing an exception to the 10% early distribution penalty for withdrawals for certain emergency expenses. The reason for this proposal is that a vast majority of Americans surveyed would not be able to come up with $1,000 for emergency expenses. This proposal would allow them to withdraw it and repay that distribution over 3 years.

Public Safety Officers and Military – Military spouses would now be eligible for retirement plans with small employers and those employers would receive a tax credit of $200 per spouse, with an enhanced credit up to $300 per spouse if the employer makes contributions to the plan.

Disaster Relief – Provision allows for up to $22,000 to be distributed from employer retirement plans or IRAs for affected individuals and would not be subject to the 10% additional tax.

Employer Plans – A provision in this category would allow a small employer (100 or fewer) that adopts a plan that satisfies the default enrollment requirements and employer matching contributions described in sec. 101 would be eligible for a tax credit.

Many other proposals in the Senate bill can be found here.