There is plenty of activity on Capitol Hill, but it comes amid a climate that creates challenges for the retirement industry, NAPA Executive Director Brian Graff noted June 29. Graff addressed a virtual general session of the National Tax Deferred Savings Association's annual conference.
The environment now is very different, Graff remarked. There is a lot of discussion, he said, “but not a lot of agreement.” He added that it is challenging to “keep retirement policy out of the fray.”
SECURE 2.0
Graff highlighted portions of the Securing a Strong Retirement Act—also known as SECURE 2.0—that would have an especially important impact of the retirement plans that are the focus of NTSA attention and activity.
For instance, Graff noted that a provision of the bill would increase the small employer pension plan start-up credit to 100% of cost for employers with up to 50 employees, capped at $5,000. Current law limits the credit to 50% of the cost. It calls for an additional employer contribution credit for defined contribution plans, he noted. Graff suggested that this provision would be “a good thing” for NTSA members to be looking at.
There is another provision, Graff observed, that would allow 403(b) plans to invest in collective investment trusts (CITs). “This is an inevitability. There is no appetite to stop this,” he said. Graff suggested that members “should be prepared for it.”
The bill includes a provision addressing missing participants as well, which would involve the Pension Benefit Guaranty Corporation (PBGC). More specifically, it would require the PBGC to update its existing online database of lost accounts to include the unclaimed accounts of all former employees worth $6,000 or less. Employers would be allowed to transfer to the PBGC the retirement accounts of former employees with a balance of less than $1,000, to be invested in U.S. Treasury securities. “Missing participants continue to be a big problem,” said Graff, adding that this provision “could be a great way” of helping employers in their effort to deal with them.
And SECURE 2.0 also touches on hardship distributions as well. Graff noted that it would conform the existing hardship distribution rules for 401(k)s to 403(b)s, and would allow QNECs, QMACs, plus earnings in 403(b)s to be distributed.
But That’s Not All
There are other bills under consideration as well, Graff noted. For instance, the Automatic Retirement Plan Act, he noted, is a priority for House Ways and Means Chairman Richie Neal (D-MA), and which he called “a really big idea.” The measure would nationalize the requirement that employers offer at least an automatic enrollment IRA or a 401(k) plan. It would not supersede state-run programs now in place, but would stem the patchwork of different plans from becoming widespread, Graff noted.
Prospects
What are the prospects for passage of retirement legislation? Graff noted that there are many proposals that are garnering attention on the Hill, such as those concerning infrastructure and jobs initiatives. He told attendees that there are “many questions” about which—and how—legislative initiatives will go forward, observing that prospects for enacting big ideas are “very challenging in the Senate.” At the very least, he said, it is likely that there will be committee action in both chambers, as well as behind-the-scenes activity concerning the provisions of different versions of relevant measures.
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Graff: Current Legislative Environment is 'Challenging' - National Association of Plan Advisors
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