So many actions have unintended consequence. A perfect example: enactment and implementation of the Affordable Care Act, which may have an unintended impact on retirement plans.
“One would think this wouldn’t have much of an effect,” said Wagner Law Group president Marcia S. Wagner at a March 23 session of the NAPA 401(k) Summit in New Orleans. But one would be wrong to come to that conclusion, Wagner says, noting that the ACA is already having direct and indirect effects on retirement plans.
For instance, said Wagner, employees who sign up for coverage through the federal health care exchange may not be able to afford both coverage and elective 401(k) deferrals -- and may reduce their 401(k) deferrals as a result. In fact, says Wagner, attorneys at her firm are already seeing that happen.
In addition, employers may shift revenue from 401(k) matches to pay for health coverage. That further reduces the incentive for employees to make elective deferrals into a 401(k). And when state exchanges are up and running, brokers will change their activity.
Not only that, Wagner noted, if health coverage exchanges work, the idea of "retirement fund exchanges" could arise. This concept actually is nothing new, remarked Fidelity Investments senior VP for policy development Douglas B. Fisher. “This has been happening for 25 years,” he observed. But Fisher added a hopeful note, calling it an opportunity to integrate spending.
Drinker Biddle & Reath Partner C. Frederick Reish also struck a positive tone. He believes that the ACA will not hurt retirement plans and could enhance the availability of revenue.
