House passes bill that would bring major changes to U.S. retirement system

Breaking down retirement bill SECURE Act

A bill that would mark the biggest change to the U.S. retirement system in a decade if passed has just cleared the House. The SECURE Act, which has bipartisan support, would allow more small businesses to help with retirement plans, help contribute and pay off loans and let parents use retirement money to help with childcare.

"For retirees right now, you have to start pulling money out of your account at age 70-and-a-half. This bill would increase that to age 72," CBS News business analyst Jill Schlesinger told "CBS This Morning." "It would allow seniors to put more money in their retirement plans. Right now, you can't put it in to an IRA after age 70-and-a-half. This bill says 'no keep working, put money away,'" Schlesinger said.

The legislation is intended to address the lack of retirement savings among the U.S. workforce and address the needs of a population that is living longer. According to Schlesinger, the bill won't just affect those who are about to head into retirement but will also help younger people and families who are attempting to pay down their student loans and get on the road to retirement.  

"Families could tap their 529 plans, pay up to $10,000 a year down on their student loans," she said. "These are such important ways to help get more people on the road to a retirement plan."

The bill lays out a plan to pay for these changes by altering the rules around inheriting a retirement account.  

"Now if you're a spouse, there's never a rule about what you have to do with it. You get the money from your spouse. You can take that out over a long period of time. Right now under this rule it would say if you inherit an I.R.A. or retirement account and you're not the spouse, you would have to take that money out of the plan within 10 years. That's how the government would tax that money or whatever your income tax bracket is at the time."

Schlesinger said she expects the SECURE Act will pass the Senate and go on to be signed into law by President Trump.