(b)lines Ask the Experts – Any Tax Reform Retirement Changes Coming?

“I hear that there is discussion of additional tax reform. Should I be concerned that there will be major retirement plan changes?”

Stacey Bradford, Kimberly Boberg, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:


You are correct in noting that there is potential for additional tax reform. You should always be wary of the possibility of significant retirement plan changes in an environment of tax reform, since retirement plan changes can be used to raise the revenue necessary for tax cuts, and such changes have been on the table before, as recently as last year (the floating of “Rothification” of defined contribution (DC) plans, for example). However, there is no major retirement plan reform that has been made public at this time that appears to have a significant chance of becoming law in the short-term. There are only about 30 legislative days left for Congress in the 2018 calendar year, so the clock is ticking to pass legislation that would be effective in 2019, especially given the fact that there will be mid-term elections this year.


Having said that, if broader tax reform does begin to move, it is always possible that significant retirement plan legislation can be written quite quickly into it. There are also some proposals being considered that would make some less-comprehensive changes to retirement plans, such as the Retirement Enhancement and Savings Act of 2018 (RESA), which, among other items, would make it easier for unrelated employers to band together to establish multiple employer plans (MEPs), remove the 10% cap on deferrals in an auto-enrollment program, simplify administration of safe harbor plans, make it easier for 403(b) plans to terminate, and clarify who could participate in a church plan. So stay tuned to PLANSPONSOR for the latest developments; your outside retirement plan counsel will likely keep you updated in this area as well.



NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.


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