As the dust settles on the Tax Cuts and Jobs Act and attention turns to other legislative initiatives, is there a chance we will see any retirement policy legislation in 2018?
In NAPA’s Feb. 27 members-only webinar, “First Quarter 2018 CPFA Washington Update,” Doug Fisher, Director of Retirement Policy at the American Retirement Association, addressed this topic, as well as state-based fiduciary activities, the impact of the TCJA on retirement plans and other issues.
Addressing the outlook for retirement policy legislation, Fisher pointed to Senate Finance Committee Chairman Orrin Hatch’s (R-UT) Retirement Enhancement and Savings Act (RESA) as the only true bipartisan retirement reform legislation in Congress over the past couple of years. (The legislation has not been reintroduced in the current Congress, but it could be called up by the chairman at any time.)
“What’s interesting about this bill is that it’s important to Senator Hatch, who is the retiring chairman of the Senate Finance Committee, and there is some interest in trying to move this bill through regular order before the end of the year,” Fisher explained. He noted that the ARA is working with Senate and House members to attach the bill to the upcoming March 23 government funding bill. While there is interest in Senate, the prospects are less certain in the House. The bill has not been reviewed by the House Ways & Means Committee.
Fisher reminded webinar participants that the legislation, among other things, would permit open MEPS or pooled plans; require lifetime income disclosure for DC plans; expand the due date for adopting plans; remove the auto-enrollment safe harbor cap; and provide a generous tax credit for plan start-up costs and auto-enrollment adoption.
Fisher also discussed the possible outcomes for retirement policy if the Democrats were to regain control of the House. If that were to happen, he noted that Rep. Neal, as the current ranking Democrat on Ways & Means , likely would become Chairman and would be a major player in setting the agenda for both retirement and tax policy legislation in the next Congress.
Neal has introduced the Automatic Retirement Plan Act of 2017 that generally would require all employers to maintain a 401(k) or 403(b) plan with limited grandfathering of existing plans for six years. In addition, he noted that all employees age 21 or over who are expected to work more than three months must be enrolled at 6%, with auto escalation of 1% per year, up to 10%.
“This is Congressman Neal’s and the Democrats’ vision of the next generation of retirement reform. Basically, what Neal is saying is that, if you can solve the coverage problem with the private retirement plan system, then he will preempt state law efforts to develop private retirement coverage solutions,” Fisher explains. In his bill, Neal includes a provision that would exempt most state laws that would call for auto enrolling private employees in state-based retirement plans. “It is an interesting development and something we need to pay attention to and work on constructively with Rep. Neal,” Fisher stated.
NAPA members have complimentary access to the on-demand recording of the Washington Update webcast. Log into your account on NAPA Net. Go to the Education tab, then the My Learning Activities page. You will see the webcast in the list of offerings, along with four others that have been held within the last 12 months.
Also, watch for an email about the Second Quarter 2018 Washington Update, which will be held live on May 15.
