What is the SECURE Act?

Matthew Mullowney |

Based on the U.S. Bureau of Labor Statistics, only 55% of civilian adults take part in workplace retirement plans. Even those who invest fall short of the recommended percentage of their yearly earnings. Wealth management Vanguard data show that the median 401(k) investment for those 65 and older is a little over $58,000. Congress approved The SECURE Act hoping to help remedy this crisis, but unfortunately, the bill did not go far enough. So, senators from the Health, Education, Labor, and Pensions (HELP) Committee introduced two bills and formed a bicameral working group.

SECURE Act Legislation?

The SECURE Act is a bill with several provisions aimed at ensuring that older Americans can access tax-advantaged accounts to help prevent them from outliving their assets. It was supposed to convince employers who have shied away from offering these plans, which are complex and expensive to administer. However, the Secure Act failed short.

New Provision

The HELP committed proposed the Simplifying Small Business Retirement Savings Act to simplify access to and create retirement plans for small businesses. The bill would amend two provisions, (PEP) Pooled Employer Plan and (GoP) Group of Plans as part of the SECURE Act of 2019.

Under the new legislation, companies that offer retirement plans usually select trustees with varying degrees of responsibility for managing plan assets. But, PEP provisions limit the type of trustee providers can use, which has reduced the number of PEPs available to small businesses. This new legislation allows PEP companies to hire Discretionary as well as Directed Trustees to administer their plans. Sponsors say that this new option would provide small businesses with more options at lower costs by expanding the PEP market.

As part of the legislation, the Labor Secretary is tasked with studying the PEP industry and reporting the results. The findings will include recommendations on how to improve PEP operations.

Senator Hickenlooper, a Democrat, stated small businesses do not have the resources of large companies, but they are treated equally when it comes to retirement plans. He believes cutting the red tape will help employees save for retirement and create a level playing field for businesses.

Group of Plans

This provision simplifies many of the filing processes, including the Form 5500, for group plans. Companies employing less than 100 employees are required to streamline IRS compliance guidelines in this provision. But in a GoP, the administrator must follow the procedures and filing processes for larger companies.

This provision will also amend the SECURE Act to extend it to retirement plans pooled from small businesses.

However, the (ARA) American Retirement Association warned that the legislation would make filing more difficult for small plans that may have benefited from a GoP. They also believe that including a trust-level audit was redundant and contrary to the statute's purpose.

Credit for matching contributions

Additionally, Senator John Hickenlooper introduced the Incentivizing Small Business Retirement Savings Act, which would further assist small businesses in offering their employees retirement plans. This Act gives employers a tax credit for their contributions on behalf of their employees. In the legislation, employers would receive a $1,000 tax credit for non-highly compensated employees. Additionally, the credit would be available to businesses with fewer than 50 employees and decrease by 2% for each additional employee.

Bicameral Working Group

To support the expansion of retirement savings, the senators formed options, a bicameral working group. The group aims to help low- and middle-income Americans improve their retirement security. They are drafting legislation that would strengthen incentives for workers who do not have access to employer-funded retirement plans.

Bottom Line

As part of its responsibility as a government, Congress should implement policies that encourage all Americans to save for retirement. These bills and provisions will allow millions of disadvantaged workers to achieve financial confidence, build meaningful savings, and retire in dignity. Congress can strengthen our economy and create a united nation by investing in American workers.


This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.