The 2020 General Election is just days away, and one of the more significant things that has gotten seemingly lost in the shuffle in the final days of this campaign is a rather important bill that has drawn bipartisan support in Congress. And while it’s technically characterized as a “retirement bill,” it has major implications for student loan borrowers as well. In an effort to highlight a key piece of legislation that could eventually make its way into law, we thought it would be fitting to tackle this bill, which has been dubbed the Securing a Strong Retirement Act of 2020.
The bill was proposed in the U.S. House of Representatives on Tuesday, October 27 by Richard Neal (D-MA) and Kevin Brady (R-Texas) and would offer benefits to seniors and another key demographic: young professionals with student loans. Here’s a closer look at some of the highlights of this bill:
- Raise the 401(k), IRA distribution age: Currently, senior citizens must begin withdrawing money from their 401(k) and/or IRA retirement accounts by age 72 at the latest. Under this Act, that minimum age that seniors would need to begin making withdrawals would rise to 75, meaning senior citizens would be able to spend up to another three years watching their retirement savings work harder for them and grow in the money market. It’s also worth noting that this Act comes on the heels of the Secure Act, which raised the minimum withdrawal age from 70.5 to 72. That bill was signed into law by President Trump last year.
- 401(k) match for young professionals: It’s no secret that student debt is through the roof in this country. And because of it, many young professionals put off enrolling in their employer’s 401(k) plan immediately after getting hired. The thinking is that the money they retain from opting not to invest could go toward other living necessities as they manage student loan debt. One of the neat things about the Securing a Strong Retirement Act of 2020 is that employers would have the option to pay a 401(k) match to any young professionals that are paying off student loans – regardless of whether they’re enrolled in the retirement savings plan. While not all employers would offer this, it would make for a great incentive and reason for a professional to choose one company over another if given the choice. Ideally, it could be a win-win – good for workers paying off student loans and a good way for companies to establish competitive advantage in their hiring process.
The bill still has a way to go before it becomes a law, but bipartisan House support is a good start. We’ll continue to keep an eye on this bill moving forward, as it could be a good thing for Americans – both now and in the future.