A bill to expand statutory limits on retirement plan contributions to help Americans shore up their retirement savings, which have been hit by a market fallout caused by the coronavirus pandemic, has been introduced.
U.S. Representative Patrick McHenry, R-North Carolina, has introduced the “Securing Additional Value for Every Retirement Saver Act” or the “SAVERS Act.” The bill has been referred to the House Committee on Ways and Means.
For defined contribution (DC) plans, the bill calls for the annual 415 limit to be the lesser of 300% of the amount in effect or 100% of an employee’s compensation for the calendar year 2020, or any taxable years beginning in 2020. The bill proposes the same limit under Internal Revenue Code Section 402(g) for employee elective deferrals.
For 457(b) plans, the bill would increase the maximum amount which may be deferred for a taxable year beginning in 2020 to the lesser of 300% of the amount otherwise in effect or an amount equal to a participant’s includible compensation.
The bill calls for changes in individual retirement account (IRA) and SIMPLE [savings incentive match plan for employees] limits.
As compensation may have been reduced or eliminated because of employment status changes caused by the pandemic, the bill would allow the use of 2019 compensation rather than 2020 compensation for calculating the limits.