On May 5, 2021, the House Ways and Means Committee unanimously passed the Securing a Strong Retirement Act of 2021, referred to as "SECURE Act 2.0" (H.R. 2954) in reference to the SECURE Act of 2019. The bill makes a number of changes to retirement plan law but, unlike the version introduced last year, does not include a provision allowing owners of S corporation ESOPs to get the same Section 1042 tax deferral on the sale of stock to an ESOP trust as owners of C corporation ESOPs can. S. 1770, sponsored by Senators Cardin (D-MD) and Portman (R-OH), does.

The two bills are substantially alike and would make a number of changes to retirement plan law, the most significant of which is that after 2021 sponsors of 401(k) plans would have to auto-enroll employees in a 401(k) plan at a 3% deferral, increasing by 1% per year to a minimum of 10% and a maximum of 15%. Employees could choose a different deferral level, however. Other changes would allow employees to elect to have some or all of their contributions be treated as Roth contributions, delay mandatory distributions to age 73 and eventually to 74, allow student loan matching, and expand plan self-correction procedures. Although the House version does not include the Section 1042 tax deferral language, House Ways and Means Committee Chair Richard Neal (D-MA) has been a strong supporter of ESOPs, so if the bill goes to conference it's possible he would lend his support.

Overall prospects for the bill are promising, if uncertain. Bills like this do not pass on their own very often, passing instead as part of a larger must-pass bill. The first SECURE Act passed as part of a budget bill. The Senate plans to take up the bill after the August recess. Most observers believe the bill has a good chance of passing given its bipartisan support.