Legislative & Tax Highlights: Rise & Shine Act, Social Security
Improving Retirement Security with the Rise & Shine Act
In June 2022, the Senate Health, Education, Labor and Pensions Committee (HELP) voted to advance the Retirement Improvement and Savings Enhancement Act to Supplement Healthy Investments for the Nest Egg Act, also known as the Rise & Shine Act». The proposed bill would “create additional protection for workers and retirement savers at all stages of their retirement timeline.” Many features are similar to the House bill known as the Securing a Strong Retirement Act of 2021 (SECURE 2.0).
A few key similar features in both Rise & Shine and SECURE 2.0:
- Improving coverage for part-time workers – The requirement for part-time employees to participate in their employer’s retirement plan would be reduced from three years of service to two years.
- Eliminating unnecessary plan requirements related to unenrolled participants – Employers would still be required to send annual eligibility notices to unenrolled participants to encourage participation in the plan.
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A few key features unique to Rise & Shine:
- Emergency savings accounts linked to Defined Contribution Plans – Employers would have the option to offer pension-linked emergency savings accounts, which may automatically enroll employees at a maximum deferral rate of 3%. Contributions would be made on an after-tax basis and treated as elective deferrals for purposes of retirement matching contributions. The emergency saving account is capped at $2,500 (or lower as set by the employer) and once the cap is reached, the excess contribution amount is applied to the participant’s retirement plan.
- Updating the dollar limit for mandatory distributions – The limit would be increased from balances between $1,000 and $5,000 to balances between $5,000 and $7,000.
- This proposed legislation joins the SECURE 2.0 as it makes its way through the legislative process. It is evident that both parties of Congress are aligned when it comes to making saving for retirement easy, accessible, and affordable.
2023 Social Security Benefits Will See Highest Increase In More Than 40 Years
Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 8.7% in 2023. This increase in benefits is tied to next year’s cost-of-living adjustment (COLA). The 8.7% COLA will begin with benefits payable to more than 65 million Social Security beneficiaries in January 2023. Increased payments to more than 7 million SSI beneficiaries will begin on December 30, 2022.
Read more about the Social Security Cost-of-Living adjustment for 2023».
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