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PSCA Executive Reports

November 30, 2018

Retirement Legislation

Senate Finance Committee Ranking Member Ron Wyden – along with Senators Bennet (D-CO), Casey (D-PA), and Klobuchar (D-MN) – introduced S. 3636, the Encouraging Americans to Save Act (“EASA”), to replace the existing Savers’ Credit with a new matching credit of up to $1,000 for qualifying individuals.

The legislation would also reinstate the MyRA retirement program, an Obama Administration program that terminated effective September 17, 2018. The legislation highlights Democrats’ priorities for retirement policy heading into the 116th Congress. In particular, Democrats are increasingly focused on retirement policy and, in particular, on closing the coverage gap. Although the bill is unlikely to pass in the near future, it is likely something the Senate Finance Committee could take up if Democrats take control of the Senate in the future or Congressional Democrats could attempt to have added to bipartisan retirement legislation.

The legislation would modify the existing Savers’ Credit by making it a refundable matching credit of 50% on contributions of up to $1,000 to a 401(k), 403(b), 457(b), or IRA by individuals with incomes under $32,500 and couples with incomes under $65,000. The income limitations would be indexed for inflation, and the credit would phase out for savers with incomes above the limits. By making the Savers’ Credit refundable, the legislation is intended to benefit those who do not pay income taxes. Currently, those individuals may be eligible for the Savers’ Credit but do not benefit from it. Like other similar proposals, S. 3636 would require that the credit be contributed directly to a retirement plan. That would likely require material operational changes for recordkeepers and other service providers.

The bill also reinstates the MyRA program. The MyRA program was originally established by the Obama Administration as a way for people to save modest amounts in a government-facilitated Roth IRA. However, it suffered from low take-up rates and some operational challenges. The Trump Administration announced in 2017 that it would end the program, citing high administrative costs ($23 million annually) and underutilization ($34 million of contributions over three years). The program


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