Congress returned to work this week with an extensive to-do list, but questions remain about whether the most consequential retirement policy legislation since the 2006 Pension Protection Act will make the cut.
Prior to adjourning, the House of Representatives approved the bipartisan Setting Every Community Up for Retirement Enhancement (SECURE) Act (H.R. 1994) on May 23 by an overwhelming 417-3 margin. The legislation stalled almost immediately in the Senate for reasons generally having nothing to do with retirement policy, and it has been stalled ever since.
Now, following a nearly six-week break, the House and Senate face a laundry list of must-do items, including a Sept. 30 deadline to approve legislation to fund the government for fiscal year 2020, which begins Oct. 1.
While many retirement policy stakeholders are hoping the SECURE Act will be attached to the FY 2020 funding bill, what seems more likely is that Congress will approve a “clean” short-term funding bill for the remainder of the calendar year. That would set up a larger year-end spending fight that could serve as the legislative vehicle for the SECURE Act and other legislative priorities, such as tax extenders.
After passing the House by such an overwhelming margin, the SECURE Act looked as if it were on a fast track to enactment, but several senators placed “holds” on the legislation, including, at last check, holds from Sens. Ted Cruz (R-TX), Pat Toomey (R-PA) and Mike Lee (R-UT). This prevented it from being approved in the Senate under unanimous consent (an expedited procedure to approve legislation and other requests, but it takes only one senator to object).
Sen. Charles Grassley (R-IA), chairman of the Finance Committee which has jurisdiction over the SECURE Act, has been working to have the holds lifted, but those efforts so far have been unsuccessful. In the meantime, Senate Majority Leader Mitch McConnell (R-KY) continues to maintain a position that he will not bring this legislation to the floor unless and until these holds are lifted.
Key provisions of the SECURE Act include:
- easing the rules restricting multiple employer plans (MEPs), allowing two or more unrelated employers to join a pooled employer plan;
- eliminating the 401(k) non-elective notice requirements and allowing mid-year elections of the safe harbor;
- increasing the tax credit for small employer plans and the auto-enrollment safe harbor;
- allowing long-serving part-time employees to become eligible for 401(k)s;
- extending the RMD beginning date;
- adding a fiduciary safe harbor for lifetime income options; and
- modifying the nondiscrimination rules to protect longer-service participants.
Butch Lewis Act
Meanwhile, other retirement policy legislation that merits watching is the Butch Lewis Act to address funding problems facing multiemployer pension plans. Formally named the Rehabilitation for Multiemployer Pensions Act (H.R. 397), the legislation which passed the House in July would create a Treasury agency to issue bond-backed loans to faltering multiemployer plans. However, the bill has drawn harsh criticism from Republicans, who characterized it as a taxpayer bailout of union plans.
Similar legislation was simultaneously reintroduced in the Senate by former members of the Select Pensions Committee, including Sens. Sherrod Brown (D-OH), Tina Smith (D-MN) and Joe Manchin (D-WV) along with Minority Leader Charles E. Schumer (D-NY), but there has been no other action in the Senate.
House Ways & Means Committee Chairman Richard Neal (D-MA) contends that if Congress doesn’t act, nearly 1.3 million people stand to lose benefits, and that inaction could also take down the PBGC. Neal observes that the issue is not limited to “blue states” and believes that, as the legislation works its way through the process, it will pick up Republican support.
Waiting in the Wings
Other initiatives waiting in the wings include bills requiring employers to set up auto-IRA arrangements and Rep. Neal’s previously introduced Automatic Retirement Plan Act, which generally would require all employers to maintain a 401(k) or 403(b) plan, subject to certain exceptions, such as being a small employer.
These more ambitious bills are worth watching, but given the current politically polarized atmosphere in Washington, the chances are more remote they’ll move this year, let alone in the current Congress.
