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PSCA Panel Provides Update on Federal, State Activity

Regulatory Compliance

Capitol Hill and statehouses, federal and state regulators, bipartisan efforts and gridlock. An expert panel discussed recent developments at the federal and state levels in an April 30 session at the Plan Sponsor Council of America’s 2019 annual conference in Tampa. 

Panelists included Will Hansen, Chief Government Affairs Officer at the American Retirement Association; and David Levine and Brigen Winters, Principals at the Groom Law Group, Chartered. 

Bipartisan Support for Retirement Reform

The Retirement Enhancement and Savings Act of 2018 (RESA) would have passed last year, panelists said, if not for the federal government shutdown. 

But what a difference a few months can make. Capitol Hill may have been deadlocked a mere four months ago, but at least with regard to retirement savings, Winters noted, there is now bipartisan support for action. He reported that the SECURE Act, which the House Ways & Means Committee reported unanimously, will go to the full House soon, and also to the Senate Finance Committee for markup and possible amendment as the measure wends its way through that chamber. 

But that rare dose of bipartisanship does not extend much beyond that bill and general agreement that retirement savings plans should be supported, the panel observed.

Washington Update

The tides have been flowing in the direction of electronic communication for some time now. But some bastions of traditional paper communication persist, including participant disclosures. The panel observed that at least one industry interest group supports paper disclosure over electronic, and that makes it less likely that legislation concerning electronic disclosures will progress. 

But it is possible that regulations could accomplish what legislation might not. While the Department of Labor’s ill-fated fiduciary rule is no longer in effect, the Securities and Exchange Commission has been working on its own rule. Levine told attendees that the SEC is going it alone, and not endeavoring to bring together its rule and the DOL rule. For one thing, he said, we have yet to see what standards the SEC will set regarding determining whether one is a fiduciary. 

And while the DOL is not pursuing the fiduciary rule, it is interested in missing participants, Levine said. In addition, he said, guidance on partial distributions is expected later this year. 

States Address Retirement Issues

Our system recognizes that the states have considerable power to regulate within their own boundaries, and the panel observed that there are several current examples of states stepping in where the federal government is not. 

For instance, the panel said, while the DOL’s fiduciary rule was stopped in its tracks, various states are forging ahead with their own fiduciary rules. Hansen noted that Nevada’s rule lacks an ERISA carveout, which could lead to litigation over ERISA preemption. Additional states are considering such measures, Hansen said, but none of them are likely “to cross the finish line” this year.  

And while the federal government does not offer a retirement plan for private-sector workers beyond Social Security, states are another matter. Hansen noted that Illinois was the first state to enact a measure establishing a Secure Choice Program, and Oregon was the first to implement a program for private-sector employees. California, Maryland and New Jersey have also enacted similar measures, he noted, and other states are considering them.

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