
<p>Retirement insights from a Colorado PERA perspective</p>



<p></p>


A distant view shows a mountainous landscape with sloping peaks, green trees in the foreground, and a cloudy sky above.


<p>Winter is nearly over (according to the calendar, at least), and state lawmakers in Denver are more than halfway through the 120-day Colorado General Assembly. In Washington, DC, senators and representatives from across the country are well into their own legislative work in Congress.</p>



<p>Some of that important legislative work pertains to public employees and their retirement benefits. Here we discuss key actions lawmakers have taken so far in 2023, as well as what may still be ahead.</p>



<h4 class="wp-block-heading"><strong>Colorado legislation</strong></h4>



<p>So far this session, state lawmakers have introduced more than 400 bills, seven of which apply directly to Colorado PERA.</p>



<p>Four of those bills have been postponed indefinitely. That means the bill is no longer under consideration and these will not make it to the House or Senate floor for a vote. This can happen if lawmakers decide a bill needs more work or doesn’t have the support to pass.</p>



<p>Several other bills remain under consideration and are working their way through the process in the state legislature. Included in those bills is <a href="https://leg.colorado.gov/bills/sb23-056" target="_blank" rel="noreferrer noopener">SB23-056</a>, which aims to fully recompense PERA for the state’s missed 2020 payment of $225 million to PERA. Legislators <a href="https://peraontheissues.com/colorado-lawmakers-pass-bill-making-up-225m-payment-to-pera/" target="_blank" rel="noreferrer noopener">passed a bill last year</a> that aimed to make up that payment, and Gov. Jared Polis signed it into law. This new bill aims to pay PERA the remaining shortfall of $35.05 million.</p>



<p>Other bills currently under consideration include <a href="https://leg.colorado.gov/bills/sb23-016" target="_blank" rel="noreferrer noopener">SB23-016</a>, which would require PERA to include in its annual&nbsp;<a href="https://www.copera.org/investment-stewardship" target="_blank" rel="noreferrer noopener"><em>Investment Stewardship Report</em></a>&nbsp;a description of climate-related investment risks, impacts and strategies, and <a href="https://leg.colorado.gov/bills/hb23-1176" target="_blank" rel="noreferrer noopener">HB23-1176</a>, which would create a new defined contribution plan for members of PERA’s School and Denver Public Schools divisions.</p>



<blockquote class="wp-block-quote">
<p><strong>READ MORE:</strong> <a href="https://peraontheissues.com/2023-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">2023 Proposed Legislation Status</a></p>
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<p>As we saw last year, legislative work can continue all the way up to the last minute of the session, so there’s still plenty ahead. That includes the Long Bill, which lays out the State’s budget and spending for every state department and program for the next fiscal year. The Long Bill will be introduced in the Senate in late March. All legislative activity for the current session will wrap up by May 8.</p>



<h4 class="wp-block-heading"><strong>Federal legislation</strong></h4>



<p>Lawmakers in Washington, DC have been working on bills affecting public employee retirement.</p>



<p>While Congress passed the package of retirement-related legislation collectively known as SECURE Act 2.0 in late December, many of its dozens of provisions don’t take effect until 2023 or 2024. Those include an increase in the age that retirees must start taking their annual required minimum distributions (RMDs) and new types of penalty-free distributions from retirement accounts.</p>



<blockquote class="wp-block-quote">
<p><strong>READ MORE:</strong> <a href="https://peraontheissues.com/whats-in-secure-2-0/" target="_blank" rel="noreferrer noopener">What’s in SECURE 2.0?</a></p>
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<p>Congress is also tackling an issue that comes up every session: <a href="https://content.copera.org/checking-in-on-legislative-activity-so-far-this-year/" target="_blank" rel="noreferrer noopener">Social Security’s Windfall Elimination Provision and Government Pension Offset</a>. The two provisions of federal law can reduce Social Security benefits for members of Colorado PERA, which serves as a substitute for Social Security. While lawmakers have introduced bills addressing the WEP and GPO in every session of Congress in recent years, the bills never make it to a floor vote for full consideration, with lawmakers citing the cost as a key reason.</p>



<p>So far this year, lawmakers have re-introduced last year’s Social Security Fairness Act, which seeks to repeal both the WEP and GPO. Last year, we saw multiple similar bills, with some aiming to modify the WEP and GPO calculations rather than repealing them. It remains to be seen whether lawmakers will introduce other bills on the topic this year.</p>



<blockquote class="wp-block-quote">
<p><strong>READ MORE:</strong> <a href="https://peraontheissues.com/bill-to-repeal-wep-gpo-reintroduced-in-congress/" target="_blank" rel="noreferrer noopener">Bill to Repeal WEP/GPO Reintroduced in Congress</a></p>
</blockquote>



<p>As always, <em>PERA On The Issues</em> will continue to track these topics and others that come up throughout the year. You can <a href="https://peraontheissues.com/subscribe/" target="_blank" rel="noreferrer noopener">subscribe to our biweekly email newsletter</a> to stay in the loop, as well as sign up for the <a href="https://www.copera.org/ambassador-program" target="_blank" rel="noreferrer noopener">PERA Ambassador</a> email list to be informed about important legislative activity.</p>


Checking in on Legislative Activity So Far This Year


<p>In late December, Congress passed a <a href="https://www.congress.gov/117/bills/hr2617/BILLS-117hr2617enr.pdf" target="_blank" rel="noreferrer noopener">$1.7 trillion spending bill</a> to keep the government funded through September. Included in that bill, now signed into law by President Biden, was a package of retirement-related reforms collectively known as the SECURE 2.0 Act.</p>



<p>SECURE 2.0 builds on the original SECURE Act from 2019, which aimed to improve access to retirement savings for all Americans.</p>



<p>There are nearly 100 provisions in SECURE 2.0. While most of them aren’t particular to public defined benefit plans like Colorado PERA, many of them could affect public sector workers and retirees who have money saved in a defined contribution account like a 401(k) or 457 plan.</p>



<p>Here are some of the major provisions included in the legislation and what they mean.</p>



<h4 class="wp-block-heading"><strong>Automatic enrollment in 401(k) plans</strong></h4>



<p>One of the biggest changes resulting from SECURE 2.0 will be automatically enrolling workers in their employer’s 401(k) plan starting in 2025. Unless they opt out, eligible employees will automatically contribute at least 3 percent of each paycheck to their retirement account, and that amount will increase by 1 percent each year until it reaches at least 10 percent (but not more than 15 percent). The mandatory 401(k) auto-enrollment provision will not apply to government plans like Colorado PERA.</p>



<h4 class="wp-block-heading"><strong>Student loan matching on retirement accounts</strong></h4>



<p>This provision is aimed at people who aren’t saving for retirement because they’re paying off student loans and can’t afford both. Beginning in 2024, employers will be allowed to match a worker’s student loan payments and deposit that money into their 401(k) or 457 plan account.</p>



<h4 class="wp-block-heading"><strong>Emergency savings accounts</strong></h4>



<p>Many Americans lack a dedicated savings account for emergency expenses and often end up tapping into their retirement savings to pay for unexpected costs. Under this provision, employers will be able (but not required) to automatically enroll workers in an emergency savings plan, with employees contributing no more than 3 percent of their salary on a Roth basis. The first four withdrawals from the account each year will be exempt from any fees or charges solely on the basis of such withdrawals.</p>



<h4 class="wp-block-heading"><strong>Changes to required minimum distributions (RMDs)</strong></h4>



<p>Under current law, retirees are required to start taking withdrawals (required minimum distributions, or RMDs) from retirement accounts like 401(k)s when they reach a certain age. The previous SECURE Act raised that age to 72 in 2019. SECURE 2.0 raises the age to 73 as of Jan. 1, 2023 (retirees who turned 72 in 2022 and already began taking RMDs will need to continue taking their RMDs). The RMD age will then rise to 75 in 2033. SECURE 2.0 also reduces the penalty for failing to take RMDs from 50 percent to 25 percent.</p>



<h4 class="wp-block-heading"><strong>New allowable distributions</strong></h4>



<p>Several provisions of SECURE 2.0 lay out new circumstances under which a person can withdraw money from their retirement account(s) before they’re retired without facing a penalty. The new rules allow for penalty-free withdrawals for personal or family emergencies (one distribution up to $1,000 per year), in domestic abuse cases (the lesser of $10,000, indexed for inflation, or 50 percent of the participant’s account), to pay for long-term care insurance (up to $2,500 per year) and for terminally ill patients.</p>



<h4 class="wp-block-heading"><strong>Retirement account lost-and-found</strong></h4>



<p>For workers who have held multiple jobs throughout their careers and left behind retirement accounts, it can be a challenge to find and claim those old accounts. It can be similarly difficult for plan administrators to find account holders who may have moved or changed names. This provision creates a nationwide database of retirement plans under the Department of Labor, allowing account holders to more easily find the contact information for plan administrators and claim their old accounts.</p>



<p><a href="https://www.help.senate.gov/imo/media/doc/secure_20sectionbysection.pdf" target="_blank" rel="noreferrer noopener">Click here</a> for a more detailed section-by-section explanation of each of the provisions in SECURE 2.0.</p>


What’s in SECURE 2.0?


<h4 class="wp-block-heading"><a href="https://www.kiplinger.com/retirement/bipartisan-retirement-savings-package-in-massive-budget-bill" target="_blank" rel="noreferrer noopener"><strong>SECURE 2.0 Act Changes 401(k), IRA, Roth, Other Retirement Plan Rules | Kiplinger</strong></a></h4>



<p>The package of retirement-related legislation known as SECURE 2.0 was included in the budget bill that President Biden signed into law in late December. The legislation includes dozens of new provisions, including raising the age for Required Minimum Distributions (RMDs), automatically enrolling employees in their workplace retirement plans, and allowing employers to make matching contributions to an employee’s retirement plan based on the employee’s student loan payments.</p>



<h4 class="wp-block-heading"><strong><a href="https://www.9news.com/article/news/local/new-colorado-laws/73-9cc1291b-e36e-44e9-8e7b-a52d41f17e32" target="_blank" rel="noreferrer noopener">4 New Colorado Laws and What They Mean for Your Wallet | 9News</a></strong></h4>



<p>The new year brings with it some new state laws now in effect, including some that could affect your finances. Changes from the new laws include a higher minimum wage in Colorado and the beginning of payroll deductions for the state’s new Family and Medical Leave Insurance (FAMLI) program.</p>



<h4 class="wp-block-heading"><a href="https://www.cbsnews.com/news/tax-refund-2023-irs-backlog-gao-report/" target="_blank" rel="noreferrer noopener"><strong>With Growing Backlog at the IRS, Millions of Americans Still Waiting for Their Tax Refunds | CBS News</strong></a></h4>



<p>Something to be aware of as we head into another tax season — the IRS is still struggling to work through a backlog of millions of tax returns from prior years. While the agency has ramped up hiring to tackle the backlog, the IRS is warning taxpayers not to plan on or expect any 2022 tax year refund by any particular date.</p>



<h4 class="wp-block-heading"><a href="https://www.reviewed.com/money/features/9-ways-solo-agers-can-prepare-retirement" target="_blank" rel="noreferrer noopener"><strong>9 Retirement Tips for Solo Agers | Reviewed</strong></a></h4>



<p>Planning for one’s retirement can be a challenge, especially for those who don’t have a partner or family they can rely on for help. If you’re facing the prospect of retiring alone, or think you might, here are some factors to consider and tips from financial planners.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: SECURE 2.0 Passes in Year-End Budget Legislation


<h4 class="wp-block-heading"><a href="https://content.copera.org/news-you-should-know-lawmakers-still-working-on-secure-2-0-retirement-legislation/" target="_blank" rel="noreferrer noopener"><strong>SECURE 2.0 Could Pass Before New Congress | Pensions &amp; Investments</strong></a></h4>



<p>Lawmakers in Washington, DC continue to work on a number of retirement-related proposals that have collectively been referred to as “SECURE Act 2.0.” While time is running low to pass new legislation, there’s still a chance lawmakers could reconcile the bills and pass a final package before the end of the year.</p>



<h4 class="wp-block-heading"><a href="https://www.reuters.com/markets/us/several-parts-us-yield-curve-are-inverted-what-does-it-tell-us-2022-11-01/" target="_blank" rel="noreferrer noopener"><strong>Explainer: Several Parts of the U.S. Yield Curve Are Inverted: What Does It Tell Us? | Reuters</strong></a></h4>



<p>Experts often look to the U.S. Treasury’s so-called “yield curve” to determine if the country is headed for a recession, since inversions in the curve have reliably predicted past recessions. Here’s a look at recent trends in Treasury yields and what they could mean for the economy.</p>



<h4 class="wp-block-heading"><a href="https://www.investing.com/analysis/us-personal-savings-rate-nears-historical-bottom-200631728" target="_blank" rel="noreferrer noopener"><strong>U.S. Personal Savings Rate Nears Historical Bottom | Investing.com</strong></a></h4>



<p>During the early months of the COVID-19 pandemic, many people buckled down and significantly increased the amount of money they were putting into savings. That trend has since reversed, and recent data show Americans are now saving at historically low levels.</p>



<h4 class="wp-block-heading"><a href="https://401kspecialistmag.com/what-is-pretirement-and-why-do-more-people-want-one-before-retiring/" target="_blank" rel="noreferrer noopener"><strong>What is &#8216;Pretirement&#8217; and Why Do More People Want One Before Retiring? | 401(k) Specialist</strong></a></h4>



<p>Workers are increasingly interested in the idea of “preretirement,” a period of transition between full-time work and traditional retirement. A recent survey found 69 percent of respondents view retirement as a gradual transition away from full-time work rather than an abrupt end.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


News You Should Know: Lawmakers Still Working on SECURE 2.0 Retirement Legislation


<h4 class="wp-block-heading"><strong><a href="https://www.cnbc.com/2022/06/26/not-all-secure-2point0-proposals-in-the-house-and-senate-are-the-same.html" target="_blank" rel="noreferrer noopener">Some ‘Secure 2.0’ Retirement Proposals in the Senate Look Different From the House Version. Here are Key Provisions Under Consideration | CNBC</a></strong></h4>



<p>Lawmakers in Washington, DC have introduced a number of different retirement-related proposals this year, pieces of which may end up in a larger “Secure Act 2.0” bill. Here are some of the key provisions under consideration.</p>



<h4 class="wp-block-heading"><a href="https://www.pbs.org/newshour/show/mark-cuban-aims-to-lower-prescription-drugs-prices-with-online-pharmacy" target="_blank" rel="noreferrer noopener"><strong>Mark Cuban Aims to Lower Prescription Drug Prices With Online Pharmacy | PBS News Weekend</strong></a></h4>



<p>Health care costs — and especially prescription drug prices — are a major expense for retirees, and many of those costs have been rising for years. Billionaire Mark Cuban is aiming to tackle the problem with his own online pharmacy, which offers over 100 generic medications at a discount.</p>



<h4 class="wp-block-heading"><strong><a href="https://www.barrons.com/articles/preretirement-plan-finances-stress-test-banks-51656107478" target="_blank" rel="noreferrer noopener">How Retirees-to-Be Can Stress Test Their Finances, Just Like the Big Banks | Barron’s</a></strong></h4>



<p>Do you have enough money saved up to make it through a possible recession? The Federal Reserve puts banks through a stress test every year, and it’s a good idea to do the same for your personal finances. If you’re approaching retirement age, here are some tips for making sure you’re in good shape.</p>



<h4 class="wp-block-heading"><a href="https://www.usatoday.com/story/money/personalfinance/retirement/2022/06/28/retirement-advice-from-retirees/50419833/" target="_blank" rel="noreferrer noopener"><strong>Retirement Advice From Actual Retirees, Tested in the Real World | USA Today</strong></a></h4>



<p>A recent survey by the Employee Benefit Research Institute asked retirees about their financial planning, priorities, concerns and reflections. One of the main takeaways? A large majority of retirees say they regret not starting to save for retirement earlier.</p>



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<p><em>News You Should Know is a digest of news from publications around the nation about finance, investing, and retirement.</em></p>


Tag Archives:

Checking in on Legislative Activity So Far This Year

What’s in SECURE 2.0?

News You Should Know: SECURE 2.0 Passes in Year-End Budget Legislation

News You Should Know: Lawmakers Still Working on SECURE 2.0 Retirement Legislation

News You Should Know: Key Provisions of House, Senate Retirement Proposals

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