Retirement Bills Set for Senate Finance Committee Markup

The Senate Finance Committee announced that it will meet this week to consider two retirement policy bills – but the real story might be what’s not in those proposals.

The first bill, the Miners Protection Act of 2016, will address the funding shortfalls in the United Mine Workers of America (UMWA) multiemployer health and pension benefit plans. The second bill, the Retirement Enhancement and Savings Act of 2016, is a combination of various bipartisan retirement policy proposals, many of which have been awaiting action in Congress for years.

The pension markup in the Senate Finance Committee this week is significant since it will be the first major congressional action on retirement issues since the end of 2014, when the Kline-Miller Multiemployer Pension Reform Act (MPRA) was included in the year-end omnibus appropriations legislative package. But the bigger story might be what for now has been omitted from the meeting agenda, since a proposal that would allow unrelated private employers to join a pooled employer defined contribution plan was not included in the second bill despite enjoying bipartisan support in Congress.

The catch-all retirement policy bill includes several provisions that have included in an American Retirement Association (then ASPPA) retirement policy proposal document from December 2013. These include proposals to:

  • give small business owners time after the end of the year to set up a new plan for that year;
  • allow employers to adopt a 4% non-elective safe harbor contribution after the end of the year for the plan in the prior year;
  • eliminate the annual notice requirement for safe harbor 401(k) plans with non-elective employer contributions; and
  • allow the termination of 403(b) custodial accounts.

Startup Help

The legislation also makes the small-employer pension plan startup credit more generous. Current law allows only for the lesser of either 50% of the startup costs of a qualified retirement plan or $500 – applied for three years. The bill would increase that calculation to the greater of $500 or $250 per non-highly compensated employer or $5,000. The bill would also add an additional $500 credit for three years for small employers that add automatic enrollment as a feature to an existing qualified retirement plan.

The bill also includes American Retirement Association-supported provisions that give terminated employees more time to pay off 401(k) plan loans and eliminate the 6-month prohibition on elective deferrals after a hardship distribution.

What’s Next?

Looking ahead – assuming the legislative package clears the Senate Finance Committee this week – there is little or no chance that the full Senate will take up this issue before the November elections. However, the pension package could well get included in a larger year-end legislative package that will likely be negotiated in December – like the MPRA provision was in 2014.

Andrew Remo is the American Retirement Association’s Director of Legislative Affairs.

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