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two state. “Although in practice Social tions include paid family and medical fice some of their future Social Security
Security is an income-transfer program, leave, both of which should be added to income in exchange for paid family leave.”
ostensibly, participants must still earn ben- Social Security. This would be complete- There’s “no doubt that parents would
efit entitlements; workers pay payroll taxes ly consistent with President Franklin greatly benefit from a federal paid fam-
over their entire career, which makes them Roosevelt’s vision. Indeed, he considered ily leave program,” Richtman said. “But
eligible for benefits later in retirement. including short-term disability in the today’s parents will need every dollar of
Contributions come first, then benefits.” Social Security Act of 1935, but ultimately their future Social Security benefits, given
decided to proceed incrementally.” the ever-rising cost of aging in America.”
SOCIAL SECURITY ADVOCATES Altman continued that it’s “long past The Mercatus Center, Richtman con-
WEIGH IN time that the United States joins the rest tinued, “is correct that the New Parents
Nancy Altman, president of Social of the industrialized world in providing Act is bad policy, but mostly for the
Security Works, agrees. The New Parents paid family leave. But in no circumstance wrong reasons. While it’s true that Social
Act “has so many shortcomings that it should anything like the Rubio-Romney Security should not be a piggy bank for
is opposed by progressives and conser- proposal, which forces people to forfeit unrelated benefits, Mercatus is using the
vatives alike,” she explained via email. a large portion of their future retirement Rubio bill to promote the myth that Social
While professors de Rugy and Blahous benefits if they take parental leave, be Security will not be there for future retir-
“are correct to oppose the Rubio-Romney enacted. It would undermine working ees.” Social Security’s chief actuary esti-
proposal, they are wrong on a number of families’ economic security in general mated that the New Parents Act “would
their specific concerns,” Altman said. and Social Security in particular.” have a negligible long-range impact on the
Contrary to their views, “Social Max Richtman, president and CEO Social Security trust fund,” he added.
Security is a perfect vehicle for long- of the National Committee to Preserve Rubio’s bill has only one co-spon-
needed paid family and medical leave,” Social Security and Medicare, explained sor — Romney, Richtman said. “And any
Altman argued, as it “is insurance against in a separate email that his group “strong- change to Social Security requires 60
the loss of wages in situations where ly oppose[s] Senator Rubio’s New Parents votes in the Senate. So I don’t see this
expenses often increase. Those situa- Act because it asks Americans to sacri- bill moving any time soon.”

Senators Release Final Text of EARN Act Retirement Bill
In the Senate Finance Committee on Sept. 8, Chairman Ron pate in retirement plans, and expands the saver’s credit for
Wyden, D-Ore., and Sen. Mike Crapo, R-Idaho, introduced the low- and middle-income workers. The EARN Act would also
final text of the bipartisan Enhancing American Retirement allow withdrawals for certain emergency expenses, according
Now (EARN) Act, which passed the committee in June. The to a section-by-section summary of the bill.
final text includes the amendments the committee approved Under present law, an additional 10% tax applies to early
as well as technical corrections that may have been needed. distributions from tax-preferred retirement accounts such
Senate Finance’s EARN Act and the Retirement Improvement as 401(k) plans and IRAs. “This provision would provide
and Savings Enhancement to Supplement Healthy Investments an exception for certain distributions used for emergency
for the Nest Egg, or Rise & Shine, Act, which passed the Senate expenses, which are unforeseeable or immediate financial
Health, Education, Labor & Pensions Committee by voice vote needs relating to personal or family emergency expenses,”
on June 14, “will become the baseline text for the Senate to the summary states. “Only one distribution would be permis-
negotiate a final Secure 2.0 bill with the House between now sible per year of up to $1,000, and a taxpayer would have the
and the end of the year,” said Dan Zelinski, spokesman for the option to repay the distribution within 3 years.”
Insured Retirement Institute in Washington. The EARN Act would also allow for penalty-free withdraw-
Wyden said in a statement on Sept. 8 that the EARN Act als from retirement plans for individuals in cases of domestic
“includes policies put forward by members on both sides of abuse. The bill also increases the age for required minimum
the aisle, and I appreciate the collaboration of Senator Crapo distributions to 75 from 72, effective after 2031, and allows
every step of the way. I look forward to working with Senator for indexing the limit on IRA catch-up contributions.
Crapo and our counterparts in the House to get the EARN “Present law permits an IRA owner to contribute an addition-
Act signed into law.” al $1,000 (unindexed) annually to the IRA beginning at age 50,”
The EARN Act encourages small businesses to adopt retire- the summary states. “This provision would index this catch-up
ment plans, makes it easier for part-time workers to partici- limit, effective for years beginning after the date of enactment.”

OCTOBER 2022 INVESTMENT ADVISOR 11