Chairman Richard Neal of the House Ways and Means Committee announced a markup of the Build Back Better Act that may help those struggling to save for retirement.
It includes two points that improve retirement security for certain groups of the working population.
The first requires employers to automatically enroll employees in IRAs or 401(k) analog plans if that employer isn’t already offering a sponsored retirement plan.
Retirement statistics show that 33% of private-industry employees didn’t have an employer-sponsored retirement plan in 2020. The Committee’s proposal would primarily impact part-time workers and service industry workers, where retirement savings are currently the lowest.
The second point would permit the Saver’s Credit to be refundable so taxpayers who do not owe income taxes could apply to have this benefit placed in their retirement account.
Formerly known as the retirement savings contributions credit, the saver’s credit offers low-income taxpayers a write-off at tax time. However, it’s difficult to access as a non-refundable credit.
Making the credit refundable up to $500, which the Committee aims to do, would allow substantially more people to benefit from it, even if they have no tax liability. And, the change would allow low-income filers to make bigger contributions to their retirement account.
These proposals will be debated in future markup sessions. If the budget plan is passed via reconciliation, there’s a reasonable chance to expect these proposals to eventually be adopted.
