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Social Security beneficiaries are poised to see bigger checks with an 8.7% cost-of-living adjustment in 2023.
But it remains to be seen how that will affect the program’s long-term funding projections, experts say.

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Social Security’s average retiree benefit will go up by $146 per month in 2023, thanks to a record 8.7% cost-of-living adjustment prompted by high inflation.
More than 70 million Social Security and Supplemental Security Income beneficiaries will benefit from those higher payments.

“It’s the highest COLA in 40 years,” said Andrew Biggs, senior fellow at the American Enterprise Institute. “It shows inflation is an issue again after having been dormant for literally decades.”
But those bigger benefit checks will cost the program, by some estimates, over $100 billion more in payouts. In 2022, the program will spend more than $1 trillion on benefits.
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In June, the annual trustees report projected Social Security’s trust funds will only be able to pay full benefits until 2035, at which point just 80% of promised payments will be payable.
The increased costs may prompt Social Security’s funds to reach insolvency at least one calendar year earlier than the trustees have projected, according to estimates by the Committee for a Responsible Federal Budget.

Other experts also have expressed concerns about how the increased benefit costs would affect the program.
“There is certainly a good chance that this could accelerate the depletion of Social Security’s primary trust fund,” said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

The trustees report released in June estimated a 3.8% COLA for 2023, based on data through February. What’s more, that same report also projected a COLA of around 2.5% for 2024.
“Given where inflation stands right now, unless things dramatically slow down, it seems likely that that’s going to be exceeded, as well,” Akabas said.
To be sure, other factors such as immigration and mortality will also factor into any new projections for the program, he said.
“I suspect that the next trustees report will not be good news,” Biggs said.

How slower wage growth is hurting the program

One key reason for that concern is wages, which have not been keeping pace with inflation. While inflation rose by 8.7% over the past year, real weekly wages fell by 3.8%, Biggs noted.
Consequently, the tax revenues that Social Security collects from workers will not go up as fast as the benefit payouts next year.
“That’s the way that inflation is really hurting the system right now,” Biggs said.
In 2023, Social Security payroll taxes will apply to $160,200 in wages, up from $147,000 this year.

While that marks a “substantially higher” increase than in years past, it still will not be enough to fully address rising prices, Biggs said.
The good news is that current beneficiaries will come out OK, as the higher COLA leads to bigger Social Security checks in the near term.
But going forward, it’s up to Congress to evaluate the program’s long-term future and decide what Social Security’s role in providing retirement income should be, Biggs said.
“When Congress starts thinking about that, then I think we’ll have a better chance of fixing the Social Security funding problem while keeping the system working very well for Americans,” Biggs said.

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The cost of “food at home,” aka groceries, climbed 13% in September from the year before.
Many of the hardest-hit items are ones most families can’t do without: Eggs are up 30.5% from a year ago, while poultry is up 17.2% and milk 15.2%.
Still, there are a number of strategies you can use at the supermarket to walk out with a smaller bill, experts say.

A woman shops for chicken at a supermarket in Santa Monica, California, on September 13, 2022.
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Despite the Federal Reserve’s efforts to get the cost of living under control, prices just keep climbing — and the uptick is especially brutal at the supermarket.
The cost of food overall climbed 11.2% in September from the year before, according to the latest consumer price index data released Thursday. Prices of “food at home,” aka groceries, soared 13% from the same time in 2021.

Many of the hardest-hit items are ones most families can’t do without: Eggs are up 30.5% from a year ago, while poultry is up 17.2% and milk 15.2%.
Still, there are a number of strategies you can use to reduce your food costs, experts say. Here are some of them.
1. Stock up on staples

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Make sure your kitchen and pantry are always stocked with certain basics, experts say. Having an ample supply of staple goods will allow you to buy fewer new items each week.
Some of the most useful foods to have on hand include eggs, pasta, rice, bread, canned tomatoes, frozen vegetables and fruit, onions and potatoes, said Leanne Brown, author of “Good Enough,” a self-care cookbook.
Consider buying these products in large quantities, if you have the space, to cut costs over time.

Many meals can be made with these ingredients alone, and they serve as the foundation for countless more.
2. Shop with a grocery list
Don’t show up to the supermarket without a grocery list and some ideas of what you’ll be cooking for the week, Brown said.
“Meal planning definitely reduces costs,” she said. “If you stick to it, you don’t waste food that you bought without a plan.”
While you map out your dishes for the week, try to think of recipes with easily repurposed leftovers, Brown said. That will enable you to buy less.
For example, a pot of chili can later be used to fill burritos or as nacho topping.
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You can decide eating certain foods on repeat is sad or monotonous or — like so much else with life — you can choose to look at it more positively.
“Having the same breakfast every day for a week can be really comforting and simplify things both wallet-wise and decision-making wise,” Brown said. “Then you can do something else the next week, so you don’t feel bored.”
Meanwhile, shopping with a grocery list probably won’t prevent all your impulse buys, but that doesn’t mean you shouldn’t use one.
“Even if you stick to them somewhat, that is great,” Brown said. “We don’t need to worry about perfection.”
As a treat, she purposefully plans to buy one or two things off her list, she said.
3. Compare stores for the best deals
You can usually browse discounts on a supermarket’s website or app, or find them listed at the retailer, experts say.
Take a look at your grocery list before you decide where to do your buying, said Erin Clarke, author of “The Well Plated Cookbook.” Then, try to find the store that offers the best value on the particular items you’re looking for.
“If you’re doing a produce-heavy trip, look for a store with frequent produce sales,” Clarke said. “If you’re stocking up on shelf-stable goods, choose a store that has the best value for those, even if other items, like produce, cost more.”

Look beyond supermarkets, too: Billy Vasquez, who runs The 99 Cent Chef blog, said he picks up many of his nonperishable items, including mayonnaise, ketchup, mustard, hot sauce, dried pasta, beans and tortilla chips, at his local dollar store.
Timing is everything with food, Vasquez added.
“Buy when fruit and veggies are in season,” he said. “They are often on sale.”
Around St. Patrick’s Day, Memorial Day and Independence Day, you can find steep discounts on items such as corned beef, carrots, cabbage, turkey, duck, roasts, ham, boxed stuffing, hamburgers and hot dogs — many of which can be stored in the freezer for long periods, Vasquez said.

Year-round, generic and store brands tend to be the cheaper varieties, Brown said, adding that, “buying more canned and frozen vegetables when many aren’t in season is another evergreen choice.”
4. Change your menu
Meat and dairy tend to be the more expensive items at the supermarket, especially of late. In response, aim to make more meals that don’t rely on them as the central ingredient, Brown said.
“Using meat sparingly as flavor, like adding a bit of bacon to a mushroom risotto, is more economical,” she said. Consuming less meat also helps you to lower your environmental footprint, she added.
Buying foods with a longer shelf life can cut your trips to the supermarket altogether. Even certain produce may last for more time than others, especially if you store it properly.
“Cabbage, carrots, Brussels sprouts and beets can last for two weeks or longer when stored in the crisper drawer,” Clarke said.
Delaying your return is always good for your wallet, she said: “Every time you walk into the store, that’s an opportunity for impulse purchases to drive up the bill.”

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The student loan forgiveness application shouldn’t require borrowers to attach any documentation, but they will need to provide their Social Security number.
Here’s what else we know about the form, which is expected to go live this month.

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The U.S. Department of Education has said that its student loan forgiveness application will go live in “early October.”
Yet it’s nearly halfway through the month, and borrowers still can’t apply.

Still, the White House has shared new information on what people can expect from the form. Here’s what we know as of now.

1. Application should still go live in October

The White House continues to say that the form will be available this month; however, it won’t begin canceling the loans until after Oct. 23, a delay caused by the ongoing legal challenges that have been brought against the Biden administration’s plan.

2. No documentation will be required

According to the Biden administration, borrowers will be able to self-attest that they meet the requirements to qualify for forgiveness and they won’t need to attach any proof to their application.
The relief is limited to people who made less than $125,000, or married couples or heads of households who earned under $250,000, in either 2020 or 2021.
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Review your recent tax returns to confirm that your income fell below those thresholds in one of those years. The Education Department will be considering people’s so-called adjusted gross income, or AGI, which may be different than your gross salary. To confirm your AGI for 2020 and 2021, look for line 11 on the front page of your federal tax return, which is known as Form 1040. 
The White House also says borrowers won’t need their FSA ID to apply for forgiveness and that they can request the cancellation on a desktop computer or on their mobile phone.
You will need to provide your Social Security number.

3. Some borrowers may need to verify income

Although you won’t be asked prove your income on the main forgiveness application, some borrowers may later need to provide documentation at the Education Department’s request.
The department will verify a certain number of borrowers have told the truth about their eligibility as a fraud prevention measure.

However, more than 90% of people with student debt fall below the income caps, according to higher-education expert Mark Kantrowitz.

4. Those who lie could face stiff penalties

Higher-education law imposes fines of up to $20,000 and as many as five years of jail for fraud and false statements involving federal student aid, Kantrowitz said.
“In addition, a borrower who lied on the form might be subject to wire fraud or mail fraud [charges],” he said.

5. Forgiveness may come within weeks

The Education Department says that after a borrower applies for forgiveness, they will get the relief within six weeks.
Experts recommend people apply as soon as the form goes live so that when student loan bills restart in January, they don’t have to make payments if their debt was fully erased or larger payments than necessary if they’re left with a smaller balance.

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FA Playbook

Social Security beneficiaries can expect an 8.7% boost to benefits in 2023, the Social Security Administration announced on Thursday.
The increase tops the 5.9% cost-of-living adjustment for 2022, which at the time was the highest in four decades.

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Amid record high inflation, Social Security beneficiaries will get an 8.7% increase to their benefits in 2023, the highest increase in 40 years.
The Social Security Administration announced the change on Thursday. It will result in a benefit increase of more than $140 more per month on average starting in January.

The Senior Citizens League, a nonpartisan senior group, had estimated last month that the COLA could be 8.7% next year. 

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The confirmed 8.7% bump to benefits tops the 5.9% increase beneficiaries saw in 2022, which at the time was the highest in four decades.
The last time the cost-of-living adjustment was higher was in 1981, when the increase was 11.2%.
Next year’s record increase comes as beneficiaries have struggled with increasing prices this year.
“The COLAs really are about people treading water; they’re not increases in benefits,” said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.

“They’re more trying to provide inflation protection so that people can maintain their standard of living,” Adcock said.

How much your Social Security check may be

Beneficiaries can expect to see the 2023 COLA in their benefit checks starting in January.
But starting in December, you may be able to see notices online from the Social Security Administration that state just how much your checks will be next year.
Two factors — Medicare Part B premiums and taxes — may influence the size of your benefit checks.

The COLAs really are about people treading water; they’re not increases in benefits.

Dan Adcock
director of government relations and policy at the National Committee to Preserve Social Security and Medicare

The standard Medicare Part B premium will be $5.20 lower next year — to $164.90, down from $170.10. Those payments are often deducted directly from Social Security benefit checks.
“That will mean that beneficiaries will be able to keep pretty much all or most of their COLA increase,” Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League, told CNBC.com this week.
That may vary if you have money withheld from your monthly checks for taxes.

To gauge just how much more money you may see next year, take your net Social Security benefit and add in your Medicare premium and multiply that by the 2023 COLA.
“That will give you a good idea what your raise will be,” said Joe Elsasser, an Omaha, Nebraska-based certified financial planner and founder and president of Covisum, a provider of Social Security claiming software.
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To make college more accessible, a growing number of institutions are eliminating student loans altogether. 
More than 20 schools now have “no-loan” policies, which means they will meet 100% of an undergraduate’s need for financial aid with grants rather than education debt.

Increasingly, college is an option only for those who can afford it or are willing to take on massive student debt. But not all schools see it that way.
To make higher education more accessible, a growing number of institutions are eliminating student loans altogether. 

More than 20 schools now have “no-loan” policies, which means they will meet 100% of the undergraduate’s need for financial aid — without education debt.

“Loans are not part of the deal,” said Anne Harris, the president of Grinnell College in Grinnell, Iowa, which offers grants in the school’s financial aid packages instead of loans. “The clarity of that has been invigorating.”
Coming out of the pandemic, Grinnell was committed to college access, Harris said, and implemented a no-loan policy for the 2021-2022 academic year.
“Doing this doesn’t solve all the issues that are out there, but it is a decisive step forward,” she said.
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That opened the door for sophomore Beck Lambert, of Manchester, New Hampshire, who couldn’t afford college. “I couldn’t even afford to apply to go to college,” Lambert said.
Lambert, 20, had already worked full time at a gas station to help cover costs in high school and was reluctant to borrow money for college. “I did not want to be in debt for the rest of my life,” Lambert said. “When you’ve lived with debt looming over your shoulders, it can be terrifying.”
Lambert applied early decision and is now majoring in history at Grinnell — on track to be the first in the family to graduate from college.

Grinnell College
Photo: Grinnell

‘Accessibility and affordability is the future’

There are many would-be college students who are concerned about paying for college and the student loan burden it may require, according to Robert Franek, The Princeton Review’s editor-in-chief and author of “The Best 388 Colleges.”
“If you can be a no-loan school that’s going to be significant,” he said.
“I see them as trailblazers in their ability to diffuse a family’s biggest concern, which is taking on too much debt to pay for college,” Franek added. “They are listening to students and their families, and they are directly responding.”

Schools that are able to do it are moving in that direction.

John Leach
associate vice provost for enrollment and financial aid at Emory University

As the debate over student loan forgiveness continues, the best way forward “is to limit the need for students to borrow in the first place,” said John Leach, Emory University’s associate vice provost for enrollment and financial aid. “Schools like Emory very much feel that responsibility.”
Recently, Emory expanded its financial aid offerings to cover 100% of demonstrated need by replacing loans with grants. The additional cost to the school was roughly $8 million, according to Leach.
“The budget modeling is key,” Grinnell’s Harris also noted. “If it gets said, can it be sustained?” Funding a no-loan policy costs Grinnell an additional $5 million a year, she estimated.
“Schools that are able to do it are moving in that direction or have already moved in that direction,” Leach said.

Accessibility and affordability is the future.

Doug Hicks
President of Davidson College

Davidson College in Davidson, North Carolina, has had a no-loan policy in place since 2007.
“We were the first national liberal arts college to make that commitment,” said Doug Hicks, Davidson’s president.
“Accessibility and affordability is the future,” Hicks said. “As a parent myself, I know that.”

Generous aid offerings lend a ‘competitive advantage’

Colleges benefit from no-loan policies, as well.  
At Davidson, application volume has jumped to 6,500 today from around 4,500 in 2007, when the school first eliminated loans. That, in turn, has improved the school’s yield — or the percentage of students who choose to enroll after being admitted — and academic standing.
“We’ve seen a far more diverse student body,” Hicks said. “A student body that’s far more interesting.”

“Being able to support students and have a world-class financial aid program helps us have a world-class student body,” Emory’s Leach also said. “It’s a competitive advantage to have more generous need-based aid.”

‘No-loan doesn’t mean free’

Of course, students may still be on the hook for the expected family contribution, as well as other costs, including books and fees. There could also be a work-study requirement, depending on the school.
“No-loan doesn’t mean free,” Franek noted.
Lambert, for example, works two part-time jobs on campus to cover the family contribution, which is roughly $1,800 a semester.
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An online tax filing tool now lets users claim the 2021 earned income tax credit, in addition to the child tax credit and third stimulus payments.
The site, GetCTC.org, is available until Nov. 15.

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People who do not typically file taxes have a new way to claim a federal tax credit aimed at low- to moderate-income workers that was temporarily made more generous last year.
GetCTC.org, a simplified filing tool, was updated on Wednesday to include the earned income tax credit. The maximum earned income tax credit you can claim for tax year 2021 is $1,502 if you have no qualifying children, which increases to $6,728 if you have three or more children. To qualify, your adjusted gross income for the year must fall within certain thresholds.

The site already lets people submit their information to claim the expanded child tax credit, worth up to $3,600 per qualifying child, as well as the third stimulus check, which amounted to $1,400 per person.
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The deadline to claim any money owed to you on GetCTC.org is Nov. 15. The tool targets people who do not typically have a filing obligation with the IRS, including single filers with less than $12,000 in annual income and married couples who file jointly with less than $25,000.

Legislation expanded access to pandemic-era credits

All three credits were part of the American Rescue Plan, which was enacted in 2021.
The legislation made the child tax credit for the year more generous, for a total of $3,600 per child under age 6 and $3,000 per child ages 6 through 17, up from $2,000 per child.

Advance payments of up to $300 per month for children under 6 and $250 per month for those under 18 were also deployed last year.
But recipients had to file tax forms to claim the rest of the sums owed to them.

The expanded child tax credit was also made fully refundable, which made it possible for families with no to low income to claim it.
Likewise, eligibility for the earned income tax credit was also expanded. More childless workers can claim the 2021 credit. The age range of eligible workers was also expanded to include younger adults ages 19 to 24 and those ages 65 and up. Moreover, income caps to qualify were also raised.

EITC is ‘the largest the largest refundable tax credit’

Code for America, the nonprofit organization behind GetCTC.org, is excited to add the EITC claiming capability, said David Newville, senior program director.
“The EITC is the biggest anti-poverty program in the country,” Newville said.
“It’s the largest refundable tax credit in terms of dollar amounts,” he said.

We want to make sure folks are receiving all of the tax benefits they’re eligible for.

David Newville
senior program director at Code for America

Yet the earned income tax credit still goes unclaimed. Up to one-fifth of those eligible have historically not received the money for which they were eligible. Consequently, billions of dollars have been left on the table, Newville said.
“When possible, we want to make sure folks are receiving all of the tax benefits they’re eligible for and get the biggest refund possible,” Newville said.

How to claim the EITC

The process for claiming the earned income tax credit on GetCTC.org is more involved than the child tax credit or stimulus checks.
Unlike those other credits, the earned income tax credit requires at least some earned income that a worker can document with a W-2. Self-employment or cash income does not qualify under IRS rules.
Filers who use GetCTC.org will now be prompted to also submit for the earned income tax credit if the tool determines they could be eligible. From there, users can opt out and proceed to claim just the child tax credit and stimulus payments, if they prefer.

Those who intend to claim the earned income tax credit should gather their paperwork, including W-2s. The tool will allow filers to pause claiming and come back to it, if necessary, Newville said. They can also change their minds in the middle of the process and just continue with the child tax credit and stimulus payments.
Filers who plan to use GetCTC.org need to do so by Nov. 15 before the IRS closes the e-file system for this year. If you miss the deadline, you can still claim the credits for up to three years by filing a 2021 tax return.
“We’re hoping this can really do a big push to reach more folks and get them a huge chunk of their tax benefits,” Newville said.

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The U.S. Department of Labor on Tuesday issued a notice of proposed rulemaking on guidelines around employers’ classification of workers as employees or independent contractors.
The rule isn’t likely to have dramatic effects but could result in more people being deemed employees.
Employees are granted federal protections like minimum wage and overtime pay.

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The Biden administration will soon issue a rule that may make it easier for workers to be considered “employees” instead of “independent contractors.”
The U.S. Department of Labor issued a notice of proposed rulemaking on Tuesday, signaling its intent to issue a formal regulation that would redefine how employers classify their workers.

The employee label carries worker protections like a minimum hourly wage and overtime pay. Workers misclassified as contractors may be eligible for damages covering some back pay of those benefits. Employees also qualify for unemployment benefits and worker’s compensation, for example.
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The Labor Department would unwind a Trump-era rule concerning independent contractors that took effect in January 2021, shortly before President Biden took office. The agency would largely reinstate the prior status quo with a few changes, experts said.
Misclassification of workers as independent contractors — also known as freelancers or the self-employed — instead of employees is happening across many industries, like construction, health care, restaurants, retail and transportation, Labor Department officials said Tuesday.
Employers may benefit financially by classifying their workforce as contractors instead of employees. For one, they don’t have to pay the payroll taxes that fund Social Security or unemployment insurance programs.

Overall, the proposal loosens classification guidelines and would therefore likely result in more workers being deemed employees instead of contractors, said Christopher Moran, a partner at Troutman Pepper Hamilton Sanders who specializes in labor and employment law.
“I think Trump was narrowing it a little bit, and I think this [Biden rule] is widening it a little bit,” Moran said of classification.
“I don’t see these [rules] as game-changing,” he added. “The swings aren’t dramatic.”

Guidelines as easy as ABC?

The action comes as many states have issued new guidelines — called “ABC” tests — that labor experts believe make it easier for workers to be deemed employees instead of contractors.
Ten states apply that test to wage and hour benefits, though some only for workers in certain industries such as construction and landscaping, according to the Economic Policy Institute.
In California, for example, where the ABC test was adopted in 2019, a ballot measure exempted ride-share drivers and other gig workers for app-based companies like Uber and Lyft. These companies often classify gig workers as independent contractors.
“Millions of app-based workers choose this work because of the flexibility it provides,” said Kristin Sharp, CEO of the Flex Association. The trade group’s members include DoorDash, Gopuff, Grubhub, HopSkipDrive, Instacart, Lyft, Shipt and Uber. “They overwhelmingly prefer to preserve their ability to choose when, where, and how often they work.”
New federal rules wouldn’t supersede state rules, Moran said.

It’s up to the business whether they will look at this and say these folks really are employees.

Sally Dworak-Fisher
senior staff attorney at the National employment Law Project,

“Today’s proposed rule takes a measured approach, essentially returning us to the Obama era, during which our industry grew exponentially,” CR Wooters, head of federal affairs at Uber explained in a written statement.
“We look forward to continued and constructive dialogue with the Administration and [Labor] Secretary [Martin] Walsh as this process progresses,” Wooters added.
Federal action would especially be a boon to “low-wage, vulnerable workers,” Labor Department officials said.
“We’ve found dishwashers were misclassified as independent contractors in order to avoid paying them the overtime they were otherwise entitled to,” said Jessica Looman, the agency’s principal deputy wage and hour administrator, on a press call.
The rule isn’t set just yet and could take months to be finalized. The agency will solicit public comments for 45 days starting Thursday.

From a legal standpoint, courts and the Labor Department have long used an “economic reality” test relative to employment classification under the Fair Labor Standards Act. Independent contractors are not economically dependent on their employer for work and are in business for themselves.
Certain factors are used to assess that question, and generally applied uniformly, experts said. But the Trump labor bureau’s rule gave precedent to two “core” factors. Among other things, the Biden rule would undo the additional weight granted those two factors.
Labor Department officials said the new rules would provide clarity to employers going forward, but experts said it’s unclear whether employers would change designations for their current workforce.
“I would hope so,” Sally Dworak-Fisher, a senior staff attorney at the National employment Law Project, said of reclassification. “But it’s up to the business whether they will look at this and say these folks really are employees.”

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Differences between the House-passed version of Secure 2.0 and the Senate proposals still need to be worked out before a bill could be finalized.
Committees with jurisdiction in both chambers are meeting to begin that process.
Here are some of the provisions and how they differ between the House and Senate.

Tom Brenner | Reuters

There’s still a decent chance that changes to the U.S. retirement system will be enacted before the end of the year.
Despite there being just a few months left before the next Congress convenes Jan. 3 — the midterm elections will be Nov. 8 — the push to improve Americans’ ability to save for retirement is supported by both Republicans and Democrats.

The proposals are collectively called “Secure 2.0” — which is a nod to the 2019 Secure Act, whose provisions ushered in major changes to the retirement system for the first time since 2006.
“There’s still tremendous bipartisan interest in doing another retirement security bill,” said Paul Richman, chief government and political affairs officer for the Insured Retirement Institute.
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“I think the opportunity for that to happen would be … following the midterm elections when [lawmakers] would be doing some tax-related bills,” Richman said. “It would be the right place because most of the changes would affect the tax code.”

Differences still need to be worked out

The House passed its version of Secure 2.0, the Securing a Strong Retirement Act (H.R.2954), in late March with a bipartisan vote of 414-5. 

In the Senate, committees with jurisdiction over retirement-related provisions have already approved proposals that collectively form the basis of that chamber’s Secure 2.0 version: The Health, Education, Labor and Pensions Committee advanced the so-called Rise & Shine Act (S.4353) in June, and the Finance Committee approved a bill in September known as the EARN Act (S.4808).
Of course, differences between the House-passed bill and the Senate’s proposals would need to be worked out before a final package could be approved by both chambers.

“Our understanding is that staff of the committees with jurisdiction have begun discussions,” Richman said.
If Secure 2.0 doesn’t make it into law by the end of 2022, the entire legislative process would have to start over with new proposals in a future Congress.
Here are some key provisions under consideration for Secure 2.0, some of which are the same or similar in both the House and Senate Secure bills — and others that are not.

Tapping 401(k) funds for emergencies

Two proposals in the Senate — approved in separate committees — address access to emergency funds.
One would allow employers to automatically enroll their workers in emergency savings accounts, at 3% of pay, that could be accessed at least once a month. Workers would be able to save up to $2,500 in the account, and any excess contributions would automatically go to a linked 401(k) plan account at the company.
The other Senate proposal takes a different approach: It would let workers withdraw up to $1,000 from their 401(k) or individual retirement account to cover emergency expenses without having to pay the typical 10% tax penalty for early withdrawal if they are under age 59½.

Our understanding is that staff of the committees with jurisdiction have begun discussions.

Paul Richman
Chief government and political affairs officer for the Insured Retirement Institute

Under both House and Senate proposals, victims of recent domestic abuse would also not face the 10% penalty for withdrawing from their retirement savings an amount up to $10,000 or 50% of the account balance, whichever is less.

Increasing access to the saver’s tax credit

Under current law, many lower- and middle-income workers are eligible for the so-called saver’s tax credit. It’s worth either 50%, 20% or 10%, depending on income, of contributions made to a workplace plan or IRA, for a maximum credit of $1,000, or $2,000 for married couples.
The credit is not available to taxpayers with adjusted gross income of $34,000 or more ($68,000 for joint filers). It also is nonrefundable, meaning that if your tax liability is zero, you don’t get any of the credit’s value as a refund.

The House-passed bill would increase the income cutoff and expand the number of people who qualify for the full credit.
The Senate provision is similar, but would also make the credit fully refundable, as well as require the refund to be deposited into a worker’s retirement account — although amounts under $100 would be sent directly to taxpayers.

Mandating automatic 401(k) enrollment for many

The bill that cleared the House would require employers to automatically enroll employees in their 401(k) plan at a rate of at least 3% and then increase it each year until the worker is contributing 10% of their pay. Workers could opt out.
It excludes existing plans, businesses with 10 or fewer employees and companies that are less than three years old. 
The Senate has not proposed automatic enrollment. 

Upping the catch-up contribution ante 

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Currently, retirement savers age 50 or older can make so-called catch-up contributions to their retirement savings. On top of the standard annual contribution limits — $20,500 for 401(k) plans and $6,000 for individual retirement accounts in 2022 — those who qualify can put an extra $6,500 in their 401(k) or $1,000 in their IRA.
The House bill would expand the 401(k) catch-up to $10,000 for individuals who are age 62, 63 or 64. Workers enrolled in so-called SIMPLE plans would be allowed $5,000 in catch-up contributions, up from the current $3,000.
The Senate proposal differs by allowing people from age 60 through age 63 make the extra $10,000 catch-up contribution.
Both chambers’ proposals would require all catch-up amounts to be made as Roth (after-tax) contributions.

Making part-timers eligible for 401(k)s earlier

The original Secure Act made it so part-time workers who book between 500 and 999 hours a year for three consecutive years could be eligible for their company’s 401(k). Both the House and Senate now want to reduce that to two years.
Companies already have been required to grant eligibility to employees who work at least 1,000 hours in a year.

Left-behind 401(k) balances

Under current law, if you take a new job and leave behind a 401(k) worth less than $5,000, your ex-employer can kick you out. For amounts under $1,000, you could be cashed out, while amounts between $1,000 and $5,000 get rolled over to an IRA.
Both the House and Senate propose raising that upper amount to $7,000.
A related proposal in both chambers would create a national retirement savings “lost and found” to help workers reconnect with retirement accounts they’ve lost track of as they move from job to job throughout their career.

Student loans versus retirement savings

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Proposals in both the House and Senate would make it easier for employers to make contributions to 401(k) and similar workplace plans on behalf of employees who are making student loan payments instead of contributing to their retirement account.

Raising the required minimum distribution age

Under the House-passed bill, required minimum distributions, or RMDs, from retirement accounts would start at age 75 by 2033, up from the current age 72, which was increased in the original Secure Act from age 70½.
The Senate proposal would raise the RMD age to 75 by 2032.
Both would reduce the penalty for failing to take RMDs to 25%, and in some cases, 10%, from the current 50%.

Improving ease of access to annuities

One option to provide an income stream later in life is a qualified longevity annuity contract, or QLAC. Once you purchase the annuity, you specify when you want the income to start, which cannot be past age 85.
However, the maximum that can go into a QLAC is either $135,000 or 25% of the value of your retirement accounts, whichever is less.
Both bills would remove the 25% cap. The Senate measure would also increase the maximum amount allowed in a QLAC to $200,000.

Eliminating Roth 401(k) RMDs, allowing matches

Under current law, Roth IRAs — whose contributions are made on an after-tax basis — come with no mandatory withdrawals during the owner’s lifetime — but Roth 401(k) accounts do. A Senate proposal would eliminate those pre-death RMDs.
Separately, provisions in both chambers would allow workers to get their company’s 401(k) matching contributions on a Roth basis. Under current law, all matching contributions are made to a pre-tax account.

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