“I really like the idea of promoting default-driven plans, and the evidence is abundantly clear that automatic retirement plans can be very effective,” says Jeff Kletti at Wells Fargo. “However, my experience has been that the pendulum can swing too far in terms of mandates.”
Tag: Retirement New Legislation
Following the GOP tax cuts, plan sponsors may wish to coordinate administration of their loan offset rollover rules with their TPA, attorneys suggest, in order to avoid inadvertently defaulting participants' plan loans.
Alongside numerous changes, the bill seeks to eliminate the current 10% cap on automatically-increased deferral rates of employees who are automatically enrolled in a plan.
The debate started when the American Council for Capital Formation published a sharply written report alleging that, as the group puts it, “CalPERS has prioritized relatively poor performing environmental, social and governance [ESG] investments at the expense of other investments more likely to optimize returns.”
The House GOP majority adopted a unified version of the Tax Cuts and Jobs Act Tuesday afternoon; they may have to repeat the process one more time.
However, employers will likely have some difficulty in knowing how to handle the January 1, 2018, effective date that has been assigned for many provisions in the House and Senate tax reform proposals, especially for the purposes of income tax withholding.
House and Senate Democrats warned that, if nothing is done, many of the more than 200 multiemployer plans in the U.S. are projected to fail within just the next 10 years.
At this interim juncture it seems that essentially all of the changes to 457(b) and 403(b) plans that were being contemplated by the Senate have been dropped.
Each having passed their own version of the bill, the House and Senate now enter the conference committee phase, during which key legislators will attempt to craft a unified version of the Tax Cuts and Jobs Act.
Among other adjustments viewed as vital to the expansion of open multiple employer plans, the bill would remove the “one bad apple” rule and the commonality requirement.
Following the earliest stages of debate, both the House and the Senate seem to have backed away from major changes to deferred compensation arrangements, as well as from other retirement-industry focused proposals.
The GOP tax reform proposal leaves 401(k) deferrals alone, but there are other significant reforms in the package that would change the treatment of hardship withdrawals and in-service distributions for DC, DB and 457 plans, among others.
Early interpretation of the 500 page tax legislation released by majority Republicans suggests the treatment of retirement account salary deferrals will largely be left alone.
“In terms of the legislative agenda going forward, there is definitely a discussion of a pivot to tax reform,” said Elisabeth Bell, tax counsel for Senator Ben Cardin; she also warned the potential for health care reform is far from settled.
One experienced benefits attorney says he has seen employee stock ownership plans do a whole lot of good for a lot of people during the course of his career—and he wants to see more.