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The Taxman Cometh, Graff Warns

What’s the retirement plan industry’s biggest concern in the coming election? American Retirement Association CEO Brian Graff addressed the issue in the opening session of the 2016 ASPPA Annual Conference at National Harbor, Md. Oct. 23.

“The biggest concern that we have has to do with tax reform,” said Graff, noting that “the ingredients [for action] are there.” He observed that even in the first presidential debate in this particularly volatile campaign, there was agreement on at least one thing: the need to reduce corporate tax rates. “I expect fairly early on, driven either by the White House of the House of Representatives, there will be a move toward reform of the tax code,” said Graff, who also serves as ASPPA's Executive Director.

What that reform will look like will depend on the results of the upcoming elections. And it is possible that the price of cutting corporate tax rates may be comprehensive reform.

What does that mean for retirement plans? Graff noted that “there is a fundamental difference between tax policy and retirement policy.” And that may not matter that much on the Hill, he indicated. “They don’t care about us as much as they care about cutting rates,” Graff said.

Graff was resolute. “It’s going to be critical” that we do something about this, he said, adding, “we’re going to be mobilizing.”

Others share ASPPA’s concern, according to Graff. “American families aren’t really concerned about the tax code,” he said, noting that their top concern is having sufficient money for retirement. And yet, he observed, the percentage of private-sector workers covered by employer-provided plans hasn’t changed in 40 years.

This, in turn, has evoked interest at the state and local level in increasing retirement plan coverage. Graff noted that states have begun enacting retirement plans to cover those who are not, and even some cities have done so — most recently New York City. “This train’s not stopping,” he said, adding that eventually a federal program may result.

“The issue of coverage isn’t going away. One way or another, they’re going to address it,” Graff said.

Legislative Possibilities

And just because Congress will soon be entering a lame duck session doesn’t mean that there won’t be action affecting retirement plans. ARA General Counsel Craig Hoffman, who joined Graff onstage, noted that Congress will need to pass a continuing resolution to fund the government, since the current one expires on Dec. 9. What’s in question, he said, is what else will be included in the measure.

In addition, it is possible legislation that would affect retirement plans may be taken up by the Senate as well. For instance, on Sept. 21 the Senate Finance Committee marked up the Retirement Enhancement and Savings Act of 2016, a measure that would make some important changes to laws affecting employer-sponsored retirement plans.

The bill includes provisions that would:


  • allow for open multiple employer plans with no commonality of certain requirements are met;

  • set guidelines for pooled employer plans and pooled plan providers;

  • allow a retirement plan adoption grace period; delay election of safe harbor 401(k) plan status

  •  simplify notice requirements;

  • permit distribution of custodial account balances upon termination of 403(b) plans;

  • expand the Employee Plans Correction Resolution System (EPCRS); and

  • address the safe harbor for the selection of an annuity provider and the portability of lifetime income options.

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