In this update you will find a concise report highlighting the issues our government affairs team is working on in four key areas: legislation, regulation, research, and events.
Legislation
Setting Every Community Up for Retirement Enhancement (SECURE) Act (H.R. 1994) – The House of Representatives passed the SECURE Act on May 23, 2019, by an overwhelming 417-3 margin. The key provision in the SECURE Act allows for two or more unrelated employers to join a multiple employer plan. It has since stalled in the Senate for a variety of reasons, many of which are unrelated to retirement savings policy. Several Senators have placed a “hold” on the bill, preventing it from passing the Senate through unanimous consent. Lead Sponsors – Rep. Richard Neal (D-MA, 1st); Rep. Kevin Brady (D-TX, 8th); Rep. Ron Kind (D-WI, 3rd); Rep. Mike Kelly (R-PA, 16th) & 55 additional cosponsors
Multiemployer Pension Plan Bills: Rehabilitation for Multiemployer Pensions Act of 2019 (H.R. 397) & Butch Lewis Act of 2019 (S. 2254) – The House of Representatives passed its version of the Butch Lewis bill in a 264-169 vote (supported by every Democrat and 29 Republicans) on
Retirement Security and Savings Act of 2019 (S. 1431) – On May 13, 2019, the bipartisan duo of Sens. Rob Portman (R-OH) and Ben Cardin (D-MD) reintroduced their comprehensive retirement policy bill. This effort marks the next chapter of their work together on these issues dating back to the early 2000s when they were rank and file members of the House Ways & Means Committee. Given their stature and expertise in this policy area, the legislation should serve as the base for the next round of retirement system improvements after the SECURE Act is enacted into law. Lead Sponsors – Sen. Rob Portman (R-OH); Sen. Ben Cardin (D-MD)
Automatic IRA Act of 2019 (S. 2370) – On July 31, 2019, Senator Sheldon Whitehouse (D-RI) reintroduced a bill, originally championed by current House Ways & Means Committee Chairman Richard Neal (D-MA, 1st) dating back to 2006, to require employers in operation more than two years and with more than 10 employees to enroll their worker in IRAs through an automatic payroll deduction program. Chairman Neal has built on this concept through his introduction of the Automatic Retirement Plan Act in the last Congress, which requires this same group of employers to offer a qualified retirement plan, like a 401(k) or 403(b) plan, to their employees. Lead Sponsors – Sen. Sheldon Whitehouse (D-RI)
Pension and Budget Integrity Act of 2019 (H.R. 4035) – On July 25, 2019, bipartisan legislation was introduced in the House of Representatives to prohibit the use of premiums paid to the Pension Benefit Guaranty Corporation from single-employer defined benefit pension plans from being counted in the House or Senate as a revenue offset for other federal spending. On several occasions in recent years, Congress has increased these premiums to offset unrelated spending, such as highway transportation funding. Lead Sponsors – Rep. Derek Kilmer (D-WA, 6th); Rep. George Holding (R-NC, 2nd); Rep. Anthony Gonzalez (R-OH, 16th)
Regulation
New Hardship Distribution Rules Finalized – On September 23, 2019, the Internal Revenue Service and Department of Treasury published final regulations amending the rules relating to hardship distributions from section 401(k) plans. The final regulations reflect changes to the statute affecting section 401(k) plans, including changes made by the Bipartisan Budget Act of 2018. The new rules apply to distributions made on or after January 1, 2020.
Association Retirement Plan Rules Finalized – On July 31, 2019, the Department of Labor published final regulations to clarify the circumstances under which an employer group or association, or a professional employer organization (PEO) may sponsor a multiple employer workplace retirement plan. The new rules are effective September 30, 2019. The Department also issued a request for information (RFI) to seek comments on whether to further amend the rules to facilitate the sponsorship of an “open MEP” or, a single defined contribution retirement plan that covers employees of multiple unrelated employer, by persons acting indirectly in the interests of those employers. Comments on the RFI are due on or before October 29, 2019.
Unified Plan Rule Exception for Multiple Employer Plans Proposed – On July 3, 2019, the Internal Revenue Service and Department of Treasury published proposed regulations to provide an exception, if certain requirements are met, to the application of the unified plan rule for a defined contribution multiple employer plan. The exception would apply in the event of a failure by an employer participating in the plan to satisfy a qualification requirement or to provide information needed to determine compliance with a qualification requirement. Comments on the proposed rule are due on or before October 1, 2019.
Research
On July 23, 2019, the American Retirement Association published a new state-by-state analysis quantifying the retirement plan coverage gap. More than 5 million employers in the United States still do not offer a workplace retirement savings benefit, a generation after the 401(k) plan design was first introduced.
In September 2019, the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC) published a paper prepared by Georgetown University Professor James Angel that examined the negative impact a proposed financial transaction tax would have on retirement savings and many other aspects of the U.S. economy. Specifically, if a 0.5% tax is implemented, Dr. Angel calculates that a typical worker with a 401(k) plan or IRA will be 8.5% or $20,000 poorer in retirement.
Events
2019 ASPPA Annual Conference– Come collaborate and learn from the 1,500 retirement plan professionals from every aspect of the retirement plan industry to increase your professional knowledge about new regulations, legislation, products, and services impacting the market. When: October 20-23, 2019. Where: Gaylord National Resort and Convention Center in National Harbor, Maryland.