Congress includes major retirement overhaul in year-end $1.7T spending bill (2024)

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A collection of provisions designed to overhaul the U.S. retirement system and help Americans save more could soon become law.

Included in the sweeping, end-of-year spending package that Congress is expected to vote on in the coming days are a series of measures that are part of the long-delayed "Secure 2.0 Act." Lawmakers have until Friday to pass the $1.7 trillion omnibus spending package in order to keep the government funded, or to approve a continuing resolution to push the deadline into next year.

Secure 2.0 – a follow-up to the 2019 Secure Act – is designed to bolster Americans' retirement savings by making a number of key changes to existing retirement account rules and certain related tax breaks.

"Including Secure 2.0 retirement provisions in the last major legislation of the year means that Congress is poised to help millions more workers and retirees with significant improvements to the nation’s private retirement system," Paul Richman, the chief government and political affairs officer at the Insured Retirement Institute, said in a statement.

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Congress includes major retirement overhaul in year-end $1.7T spending bill (2)

People walk outside the U.S Capitol building in Washington, June 9, 2022. (AP Photo/Patrick Semansky, File / AP Newsroom)

Here are some of the ways that Secure 2.0 would overhaul the current retirement system:

Automatic 401(k) enrollment

Beginning in 2025, employers that offer 401(k) or 403(b) savings plans would be required to automatically enroll employees at a rate of at least 3%, with mandatory 1% increases each year to a maximum rate of 10%. Employees could choose to opt out of the plan.

Small businesses with 10 or fewer workers and new businesses in existence for fewer than three years would be exempt from the rule.

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Creating bigger "catch up" contributions for older savers

Under current law, Americans who are 50 or older can make so-called catch-up contributions of no more than $6,500 per year to their 401(k) and 403(b) plans, with a limit of $27,000.

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But Secure 2.0 would increase the annual catch-up by 50% to $10,000, indexed annually for inflation, for participants between the ages of 60 and 63 starting in 2025.

On top of that, all catch-up contributions would be subject to Roth rules – meaning individuals pay taxes on the money upfront.

Increased age for RMDs

The bill would raise the age that Americans must take a required minimum distribution from their retirement plan to 73 beginning in 2023, up from the current age of 72.

In 10 years, the RMD age would once again move up to 75.

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Emergency expense distributions

Beginning in 2024, Americans would be allowed to take an early "emergency" distribution from their retirement accounts to cover unexpected or immediate financial needs. Individuals could take out as much as $1,000. The money could be taken once a year and would not be subject to the usual 10% tax that applies to early distributions.

However, there is a catch: Anyone who takes the emergency expense option but does not pay it back within a certain time frame will not be allowed to tap the retirement fund penalty free for another three years.

Expanding employer 401(k) match options

Another aspect of Secure 2.0 would make it easier for employers to make contributions to 401(k) plans on behalf of employees paying off student loan debt. Employers could essentially make a matching contribution to your retirement account based on your student loan payment amount – a rule intended to remove student loan debt as a major obstacle to retirement savings.

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Incentives for retirement plan contributions

Secure 2.0 would allow employers to offer small financial incentives to employees to encourage them to participate in any offered retirement plans.

Congress includes major retirement overhaul in year-end $1.7T spending bill (2024)

FAQs

Did the Senate pass the spending bill? ›

Washington, D.C. – Today, the Senate voted 72-24 to send the final set of bicameral, bipartisan fiscal year 2024 appropriations bills to the President's desk to be signed into law.

What is in the new government spending bill? ›

Congress released a massive $1.2 trillion bill on Thursday to fund the rest of the federal government. The package, which runs more than 1,000 pages, would provide funding for the departments of Defense, Homeland Security, Labor, Health and Human Services, Education, State and the legislative branch.

Has the 2024 Appropriations Bill passed? ›

Senator Collins was a lead negotiator of the bipartisan legislation. Washington, D.C. – Today, by a vote of 74-24, the U.S. Senate passed the second six-bill Fiscal Year (FY24) appropriations package.

How many spending bills does Congress pass each year? ›

Each year Congress undertakes to pass a budget and then, within the constraints set out by that budget, pass 12 appropriations bills that provide discretionary funding for the fiscal year, which begins October 1.

Is the government shutting down in 2024? ›

President Joe Biden on Saturday signed a $460 billion package of spending bills approved by the Senate in time to avoid a shutdown of many key federal agencies. The legislation's success gets lawmakers about halfway home in wrapping up their appropriations work for the 2024 budget year.

Has Biden signed the spending bill? ›

President Biden has signed a $1.5 trillion spending bill that funds the government through the end of September, a package that includes all 12 annual appropriations bills for FY 2022 along with $13.6 billion in support for Ukraine and refugees fleeing the Russian invasion.

What is the Israel spending bill 2024? ›

Israel Security Supplemental Appropriations Act, 2024

This bill provides FY2024 supplemental appropriations to the Department of Defense (DOD) and the Department of State for activities to respond to the attacks in Israel.

What is the new omnibus bill 2024? ›

The House March 22 voted 286-134 to pass the Further Consolidated Appropriations Act of 2024, legislation that would fund all remaining federal agencies through Sept. 30. The bipartisan bill includes six appropriations bills, including one funding the departments of Labor, Health and Human Services, and Education.

Which spending bills have passed? ›

BILLS PASSED
  • Defense.
  • Energy-Water.
  • Homeland Security.
  • Interior-Environment.
  • Legislative Branch.
  • Military Construction-Veterans Affairs.
  • State-Foreign Operations.

Is the government shutdown in March 2024? ›

On January 18, both the U.S. House and Senate passed a Continuing Resolution (CR) to extend current federal appropriations through March 2024 and avoid a government shutdown as lawmakers work to finalize Fiscal Year (FY) 2024 appropriations based on the nearly $1.6 trillion bipartisan topline framework agreement.

When was the last time the U.S. government passed a budget? ›

The Trump administration's budget proposal was released on March 11, 2019. On August 1, 2019, the Bipartisan Budget Act of 2019 (H.R. 3877) was passed by the House. The next day, on August 2, 2019, the bill was passed by the Senate and signed into law by President Trump.

How can the government avoid shutdown? ›

To avoid a shutdown, Congress would need to pass the first four of the 12 appropriations bills through both chambers and get them signed by the President by the end of the day on March 1, and then enact the remaining eight bills by the end of the day on March 8.

What was the vote breakdown for the spending bill? ›

The House voted on the spending package brokered by Johnson on Friday, passing the bill by a vote of 286 to 134. The bill needed 280 votes to pass. But while the legislation garnered enough bipartisan support to push it to the Senate, 112 House Republicans and 22 House Democrats voted against it.

Do bills go through the Senate? ›

After a measure passes in the House, it goes to the Senate for consideration. This includes consideration by a Senate committee or subcommittee, similar to the path of a bill in the House. A bill must pass both bodies in the same form before it can be presented to the President for signature into law.

How many Republicans are in the House? ›

United States House of Representatives
Minority WhipKatherine Clark (D) since January 3, 2023
Structure
Seats435 voting members 6 non-voting members 218 for a majority
Political groupsMajority (217) Republican (217) Minority (212) Democratic (212) Vacant (6) Vacant (6)
27 more rows

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