(b)lines Ask the Experts – What’s in Year-End Legislation for 403(b)s?

Will any of the 2015 year-end legislation that was passed have an effect on my retirement plan?”

Michael A. Webb, vice president, Cammack Retirement Group, answers:    

Unless you are a church plan sponsor, probably not. Though the budget legislation that was passed contained major relief for welfare plan sponsors in the form of  two-year delay of the so-called “Cadillac Tax” that was mandated by the Affordable Care Act (ACA), there were nothing nearly as significant on the retirement plan front.

SIMPLE plans can now accept rollovers from many other plan types, but there are relatively few SIMPLE plans in existence. There was an expansion of the definition of “qualified public safety employees”  for purposes of the exception to the 10% premature distribution penalty for such employees (which permits a waiver of the penalty for distributions on account of separation from service after age 50, as opposed to age 55 for other types of employees). However, for plan sponsors who do not employ public safety employees, there is no impact.

For church plan sponsors, there were several changes, including provisions that clarify the use of automatic enrollment in church plans and allow some 401(a) and 403(b) church plans to be merged. For more details, see “Church Plan Legislation Finally Gets Passed.” 

For the rest of us, the budget legislation was probably more notable for what it did NOT include than for what it did include; namely; any restriction on the ability of the Department of Labor (DOL) to implement its final fiduciary rule, which is slated to arrive in 2016. There was proposed legislation that would have effectively delayed the rule until the next presidential administration, but it was ultimately not included in the final budget bill.

So, for most retirement plan sponsors, no news was good news on the legislative front. Thank you for your question!


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.