Senate Finance Markup of EARN Act

Senate Committee on Finance

Open Executive Session to Consider The Enhancing American Retirement Now (EARN) Act

Wednesday, June 22, 2022


  • The Chairman’s Mark as modified and amended was reported favorably by a vote of 28–0.
  • Amendments Brown #2 to increase SSI asset limits, Whitehouse/Brown/Casey/Warren #1 to increase retirement plan participation through automatic enrollment, and Burr/Casey/Hassan #1 529 account to Roth IRA rollover were all introduced and withdrawn.
  • Daines/Stabenow/Grassley #1 to accelerate the effective date of the exclusion of changes to certain disability related first responder payments to taxable years after date of enactment was agreed to by a vote of 23–5.

Bills Considered

Opening Statements

Chairman Ron Wyden (D-Ore.)

In his opening statement, Wyden touted the bill’s changes to the saver’s tax credit, savings for those with student loan debt, a new standard form for rollovers, and retirement distributions for long-term care. He then highlighted his idea to require distributions when retirement accounts reach $10 million, which did not make it into the bill. After Daines’ opening statement, Wyden expressed support for Daines’ amendment to address abuse of conservation easement tax shelters to benefit first responders.

Ranking Member Mike Crapo (R-Idaho)

In his opening statement, Crapo said the bill will help employers offer and increase participation in retirement plans and encourage retirement savings.

The Enhancing American Retirement Now (EARN) Act

Sen. Ben Cardin (D-Md.) underscored the need to engage more people, including low-wage workers, in the retirement system by making it easier for small businesses to offer plans and highlighted changes to the saver’s credit, automatic enrollment, and lifetime income. Sen. James Lankford (R-Okla.) highlighted his extensive work to help low-income individuals save for retirement. He offered nine different letters of recommendation from investment and retirement groups into the Record.

Sen. Steve Daines (R-Mont.) discussed his only amendment to accelerate the effective date of a provision that would exempt from taxation injury-related disability pensions for first responders, firefighters, and emergency medical services (EMS) personnel. Sen. Chuck Grassley (R-Iowa) praised provisions in the bill related to first responders, conservation easement tax rip-offs, and multi-employer plans. Sen. Michael Bennet (D-Colo.) discussed provisions to allow penalty-free emergency withdraws, help first-responders, spouses of active-duty service members, and those with terminal illnesses.

Sen. John Cornyn (R-Texas) noted the bill includes his two priorities: the Bipartisan Safer Communities Act and the Legacy IRA Act. Sen. Rob Portman (R-Ohio) discussed the impact of inflation on investors’ ability to save for retirement. Sen. Bob Casey (D-Pa.) explained the need for changes to avoid enrollment and monthly fees that would reduce accessibility to ABLE accounts and his amendment to address this and introduced a letter of support from multiple organizations for his amendment into the Record. Sen. Catherine Cortez Masto (D-Nev.) thanked Wyden for including the Savings Access for Escaping and Rebuilding Act in the Chairman’s Mark. She entered three letters of support from national organizations working to end domestic and sexual violence into the Record. Sen. John Barrasso (R-Wyo.) said the Starter-K Act will lower the cost and simplify regulations for small employers and their employees to have access to retirement plans. Sen. John Thune (R-S.D.) supported increasing the required minimum distribution (RMD) to age 75, the Police and Fire Health Care Protection Act, and a provision related to Employee Stock Ownership Plans (ESOP).

Thomas Barthold, Chief of Staff, Joint Committee on Taxation, described the Chairman’s Mark and modification and three offsets, noting that the bill is fully paid for. He also noted that the bill would have a modest net surplus of $144 million over the 10-year budget planning period.

Portman asked Barthold if the RMD provision might encourage people to work longer. Barthold said the analysis focused on microeconomics and did not focus on workforce participation. Cardin asked Barthold if the selection of a Roth IRA account versus a traditional account is usually done by a younger person. Barthold said the distribution of account holders in Roth versus non-Roth tends to be younger in Roth and older in traditional, but that this trend will change with time as more employers adopt Roth accounts. Cardin asked why an employee would choose for their employer to make the match in a Roth account versus a traditional account since it would change the tax status of the contribution made by the employer. Barthold said the employee may have a projection of what their income and tax liability might be in the future, motivating the choice to have a Roth account in which distributions are exempt from tax, but that it could also be an issue of current cash flow and tax situation in terms of managing current year tax liabilities. Cardin asked if the principal amount would later come out as a nontaxable event if the employers’ contribution is taken as a Roth. Barthold said yes. Cardin asked why this gets scored for the offsets. Barthold said it is because you are replacing deductible contributions with taxable contributions which can raise revenues in the budget window.

Increase SSI asset limits

Brown introduced his Amendment to update the resource limit for supplemental security income eligibility within title XVI of the Social Security Act.

The Amendment was withdrawn.

Increasing retirement plan participation through automatic enrollment

Sens. Sheldon Whitehouse (D-R.I.), Elizabeth Warren (D-Mass.), Brown, and Casey introduced their amendment to require new section 401(k) and 403(b) plans to automatically enroll participants when they become eligible and require the IRS to create model forms businesses need to administer automatic enrollment plans in all the languages in which the form 1040 is available. Whitehouse asked and Wyden confirmed their understanding to get this amendment into the final bill.

The Amendment was withdrawn.

529 Account to Roth IRA Rollover

Sens. Richard Burr (R-N.C.), Casey, and Hassan introduced their Amendment to allow for tax and penalty free rollovers from 529 accounts to Roth IRAs, under certain conditions.

The Amendment was withdrawn.

Amendment to accelerate the effective date of the exclusion of changes to certain disability related first responder payments to taxable years after date of enactment.

Sens. Debbie Stabenow (D-Mich.), Daines, and Grassley introduced their Amendment to change the effective date of section C.3 of the Chairman’s Mark (exclusion of certain disability related first responder disability payments) to taxable years after date of enactment, and to amend section K.2 of the Chairman’s Mark (elective deferrals generally limited to the regular contribution limit) by permitting an employee to elect to make pre-tax catch-up contributions if the employee’s compensation for the prior year is below a specified dollar limit (indexed). Crapo said this amendment would push the price tag of this bill too high which is why he voted no. He added that if the amendment should pass, he would work with Daines to address these cost issues. Portman expressed his concern about the historic preservation easements and stated that they are critical to Ohio’s economic development in that they create jobs, housing, and economic growth in areas that are revitalized. He said he supports the amendment but has concerns about the historic threat it brings, which is why he voted no. Brown said he supports the underling policy of this Amendment, but he has concerns that the Amendment would harm legitimate tax breaks. Stabenow said conservation easements have been abused as tax shelters for far too long. She also said this is an opportunity to use funds in the bill to close a loophole that would greatly benefit first responders.

The Amendment was agreed to by a vote of 23-5.

The Chairman’s Mark as modified and amended was reported favorably by a vote of 28-0.

For more information on this hearing, please click here.

For an archive of past SIFMA hearing coverage, please click here.