Graff: Retirement Is Now an ‘A-Level’ Issue

At a Jan. 24 session of the National Tax-deferred Savings Association’s 2018 NTSA Summit in Houston, American Retirement Association CEO Brian Graff discussed the most important federal legislative and regulatory developments affecting retirement plans, including 403(b) and 457 plans.

Tax Reform

The recently enacted Tax Cuts and Jobs Act (TCJA) did not have the negative effect on retirement plans that it could have, Graff noted, remarking, “The good news from a retirement standpoint: We did pretty well.” And, he remarked, the idea of consolidating the 403(b) and the 457 “is finally dead.”

Not only that, Graff suggested that it occasioned a sea change regarding the prominence of retirement plans and saving on legislators’ radar screens. “Retirement is now an A-level issue,” he declared.

When the discussion of the retirement plan provisions in the tax reform bill encompassed the potential for altering and severely cutting the current contribution limit, that became the No. 1 reason for calls from practitioners to Hill offices — part of what he termed “a groundswell” of support for protecting incentives to save for retirement. “That’s a big deal,” he said, calling it “a game changer” that “completely changed everything.” Members of Congress recognized for the first time, Graff said, “that people out there really care about their retirement.”

Still, while the TCJA is the law of the land, Graff cautioned attendees not to consider the matter settled. “If you think we’re done, you’re kidding yourself,” he said. “I can guarantee they’ll be doing technical corrections for years to come.” Not only that, he said, any future Democratic administration or congressional majority “will likely want to put their stamp on tax policy.”

Tenor and Venue

But Graff noted that the tenor of the debate on Capitol Hill over tax reform as well as other issues is not characterized by the comity of years past, and that politics today “is as extreme and bitter as it’s ever been.” He attributed this in part to social media, the 24-hour news cycle and the systemic phenomena that have led to greater successes by candidates with positions that are not moderate.

Graff does not believe that’s going to change “anytime soon.” And one of the consequences of such a climate, he said, is that “states are going to fill the void” and that state legislatures “want to be active” in view of the environment in Washington. Through it all, Graff pledged, “We believe teachers should have access to an advisor.” He added that “you can count on” ARA and NTSA to work to make sure that continues.

The DOL Fiduciary Rule

“A work in progress” is how Graff described the Department of Labor’s fiduciary rule, adding that the DOL “will continue to try to make this thing work.” He reminded attendees that Labor Secretary Alexander Acosta has observed that the department is legally limited from rescinding the rule. Graff said that there is “no reason to think” that looking for ways to improve the rule will not be the DOL’s approach.

Graff noted that states are increasingly showing interest in crafting their own fiduciary rules and regulations, in part due to the blunting of the federal rule’s teeth. He expressed concern over this development, remarking, “Maybe we’ll be better off if we get the right fiduciary rule through the DOL and SEC rather than 50 different fiduciary rules.”

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