Secure Lifetime Income Through Secure Act 2.0

The bills also remove certain barriers for annuities in required minimum distribution (RMD) regulations, allowing for an acceleration of annuity payments of up to 5% each year and lump-sum return of premium death benefits.

However, unlike the House legislation, the EARN Act eliminates a penalty on partial annuitization in retirement plans.

Under current law, RMD payments are bifurcated when there is a partial annuitization, with annuity payments only counting as RMDs for the portion of the plan holding the annuity, sometimes resulting in higher RMDs. The EARN Act would eliminate this penalty by allowing annuity payments to count toward RMDs for the total balance of the plan.

Unfortunately, the bills do not include some notable bipartisan proposals that would expand access to annuities even further, such as legislation from Reps. Donald Norcross, D-N.J., and Tim Walberg, R-Mich., to allow 401(k, plan sponsors to incorporate annuities into default investment options for employees.

The bills also exclude a bipartisan proposal from Sens. Ben Cardin, D-Md., and Rob Portman, R-Ohio, to allow indexed and variable annuity contracts with guaranteed benefits to be QLACs — a change that would make QLACs more attractive for many consumers.

Despite these exclusions, the House and Senate Secure 2.0 bills include significant steps in the right direction to expand access to guaranteed lifetime income.

Pathway to Passage

Given its strong bipartisan support, advocates of Secure 2.0 hope to see Congress attach the package to a catch-all spending package at the end of this year, which is how the original Secure Act passed in 2019.

In order to position Secure 2.0 for inclusion in year-end legislation, the House and Senate must first reach consensus on the differences between their versions of the package.

Secure 2.0 still has hurdles to clear before it reaches the finish line, but it has come a long way thanks to an impressive showing of bipartisanship in both chambers of Congress. At this point, the question does not seem to be if Congress passes another retirement package, but when. This is great news for those seeking the security of lifetime income.

Tyler Brown is director of governmental affairs at Sammons Financial Group.