Sen. Orrin Hatch (R-UT), the Ranking Member on the Senate Finance Committee, introduced legislation July 9 that would simplify and enhance the current private employer-based retirement plan system.
Title II of the bill, the “Secure Annuities for Employee (SAFE) Retirement Act of 2013,” addresses the private retirement system, and includes most of the proposals developed by ASPPA’s Legislative Relations Committee over the past few years, as well as a number of other improvements. The proposals in the bill would expand coverage and simplify the operation of private retirement plans, including reporting and disclosure rules.
Some key provisions in Title II of the bill would:
• create a new safe harbor deferral-only “Starter 401(k)” plan with automatic enrollment and an $8,000 deferral limit (plus a catch-up for those age 50 and over) for employers that do not have another retirement plan
• allow employers to adopt a qualified retirement plan on or before the due date, with extensions, of the employer’s tax return
• allow employers to replace SIMPLE retirement accounts with a safe harbor 401(k) plan during the year
• remove the arbitrary 10% auto-escalation limit on elective deferrals under the existing automatic enrollment safe harbor
• permit required interim amendments to qualified retirement plans to be made in conjunction with the plans’ restatement cycle
• allow plan sponsors to make electronic delivery of retirement plan documents the default option
• direct the DOL to modify its new participant disclosure regulation so that an investment that uses a mix of asset classes can be benchmarked against a blend of broad-based securities market indices
• allow individuals to roll over insurance contracts into individual retirement accounts
• allow required minimum required distributions to be rolled over into Roth IRAs
The legislation would also restore jurisdiction over the fiduciary rules in the tax code to the Treasury Department, and would require Treasury officials to consult with the SEC in prescribing rules relating to the professional standard of care owed by brokers and investment advisors to IRA investors — thus adding yet another element to the debate over a new, broader fiduciary standard.
The legislation itself is not yet posted online, but a summary is here; Hatch’s remarks on the Senate floor can be found here.
While Hatch’s bill is not likely to be considered by the Finance Committee as standalone legislation, the inclusion of these proposals in a bill from the Ranking Member of the Finance Committee puts them in play should the committee mark up any legislation that affects qualified retirement plans in the future, including any tax reform legislation.
Andrew Remo is ASPPA’s Congressional Affairs Manager.
