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News Items, by Subject

Ret plans - policy


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Proposed Legislation Would Promote Student Loan Repayment Retirement Benefits
"[T]he Student Loan Act would open the door for student loan repayments to be treated as elective deferrals under an employer's plan and to qualify for corresponding matching contributions (rather than the special non-elective contributions described in [PLR 201833012]). In addition, the Student Loan Act would clarify nondiscrimination testing requirements for student loan repayment benefits and address how student loan repayment benefits may be provided under not only traditional 401(k) plans, but also under safe harbor 401(k) plans, 403(b) plans and SIMPLE plans." (McDermott Will & Emery)
Retirement Industry Associations in Alignment on 401(k) Auto Portability
"Representing a broad cross-section of stakeholders in America's retirement system, many of these organizations offered strong, unequivocal support for auto portability, including some important suggestions for improvements.... As an exception, the joint comments supplied by the Consumer Federation of America and the National Employment Law Project were more-skeptical, suggesting that the DOL consider more restrictions and 'guardrails.' " (401K Specialist)
[Opinion] Pension Rights Center Comment Letter to EBSA on Proposed Exemption Involving Retirement Clearinghouse, LLC (PDF)
"To better inform and protect participants we recommend that the conditions of the proposed exemption be more specific in several areas.... [A]ccount holders should be fully informed of their rights to place their accounts with another IRA provider or to cash out on demand ... [C]onsider imposing limits on some of the fees, particularly the monthly administration fee and the transfer and communication fees to be assessed after RCH identifies a new employer.... [I]nclude a statement that participant records must be maintained until the accounts are distributed ... [R]equire an appeals procedure for mistakes or disputes." (Pension Rights Center)
Four Critical ERISA Cases to Watch in 2019
"[1] Plan participants' role in retirement plan management put into question.... [2] Will the standard challenge finally make its way to the Supreme Court? ... [3] Courts grapple with which party must prove loss causation in a breach of fiduciary duty case.... [4] The [DOL]'s fiduciary rule meets its demise." (401K Specialist)
Multiple Employer Plans: Their Potential Impact on the Retirement Plan Landscape
"Recordkeepers, financial advisors, asset managers, banks, third-party administrators and other firms might form strategic alliances to provide the necessary services.... Technology companies might see this new type of arrangement as an opportunity to disrupt the marketplace by developing creative solutions that would be difficult for entrenched providers with legacy systems to emulate. Employers with existing defined contribution plans might find a MEP's reduced fiduciary responsibility and potentially lower costs attractive and drop their separate plans in favor of joining a MEP." (J.P. Morgan Asset Management)
California's New State-Run Retirement Program for Private Sector Employees Gets Under Way
"A taxpayers' rights group is challenging the program, claiming that it violates the U.S. Constitution.... Beginning in July, all eligible employers in the state will be able to enroll their workers. Eventually, most California employers that lack a retirement savings plan will be required to do one of two things: either enroll their workers in CalSavers or provide a retirement plan through the private market." (Society for Human Resource Management [SHRM])
[Opinion] SEC's Proposed Form CRS Obfuscates, Rather Than Informs
"2019 may well be a watershed year for those who care about the future of the emerging profession of financial and investment advice. Against the backdrop of a court's overturning of the [DOL's] Conflict of Interest and related rules, and the SEC's bungling, several state securities administrators, and/or state legislatures, may step in to feel the void. First up may the New Jersey Bureau of Securities, which will likely release in early 2019 a proposal to impose fiduciary duties upon brokers who provide investment advice." (Ron A. Rhoades, JD, CFP)
Market Downturn Could Accelerate 401(k) Recordkeeper Consolidation
"The 401(k) record-keeper industry is about to enter the third stage of the consolidation curve. While Stage 1 is about preserving first-mover advantage and Stage 2 is about acquisitions, Stage 3 is about ruthlessly attacking weaker competition.... The 38 national 401(k) record keepers ... are circling just five seats at the winner's table, according to the framework of the consolidation curve. Where does that leave the others? Eating scraps." (InvestmentNews)
Watch These ERISA Cases in 2019
"A number of vexing issues facing ERISA practitioners came to a head in 2018 and are primed to be resolved in the coming year. This article will examine the cases raising these issues, and the impact their resolution in the coming year will have on retirees and the retirement industry." (Cohen Milstein)
Text of 2018 Annual Report of the PBGC Participant and Plan Sponsor Advocate (PDF)
45 pages. "[Participants and plan sponsors] have observed and still often note long delays ... confusing and contradictory exchanges ... and difficulties when an issue transcends multiple departments within the agency.... [Given] rising premiums and the dwindling premium payer base as sponsors de-risk their defined benefit plans, the agency must be mindful of the resources it uses when pursuing plan sponsors for prolonged periods of time, such as during protracted negotiations in the distress termination process." (Participant and Plan Sponsor Advocate, Pension Benefit Guaranty Corporation [PBGC])
As a Grocery Chain Is Dismantled, Investors Recover Their Money, But Worker Pensions Are Short Millions
"For Sun Capital, this process of buying companies, seeking profits and leaving pensions unpaid is a familiar one. Over the past 10 years, it has taken five companies into bankruptcy while leaving behind debts of about $280 million owed to employee pensions.... Much of the tab will be picked up by the government's pension insurer, a federal agency facing its own budget shortfalls." (The Washington Post; subscription may be required)
[Opinion] ACLI Comment Letter to EBSA on Proposed Definition of 'Employer' Under Section 3(5) of ERISA (PDF)
"The proposal falls short of the President's Executive Order.... Neither ERISA nor the Internal Revenue Code include a 'nexus' or 'commonality of interest' requirement ... The Department's various positions and interpretations are inconsistent with law.... There is no legal basis for the proposal's limitations on employers.... Financial service providers should be able to sponsor an ARP." (American Council of Life Insurers [ACLI])
ERISA Implications for Firing a Whistleblower
"The Court held that the whistleblower's cooperation with the DOL was quintessential protected activity, and that defendants were liable because they arranged the vote by the full board of trustees that resulted in the whistleblower's termination, they influenced the vote by recommending the whistleblower's termination, and the trustee had the authority to remove other union trustees or have their positions with the union terminated." [Acosta v. Brain, No. 16-56529 (9th Cir. Dec. 4, 2018)] (Proskauer's ERISA Practice Center)
[Opinion] SPARK Comment Letter to EBSA on Definition of 'Employer' Under Section 3(5) of ERISA (PDF)
"[We] urge the Department to consider eliminating or loosening requirements ... A financial institution should be able to sponsor an [Association Retirement Plan (ARP)].... The Department should eliminate or loosen the 'commonality' requirement.... The Department should eliminate the 'substantial business purpose' requirement.... The Department should not mandate new disclosures." (The SPARK Institute)
Second Circuit Revives Dismissed IBM Stock-Drop Suit
"The Second Circuit reinstated a claim for breach of fiduciary duty under ERISA brought by participants in IBM's 401(k) plan who suffered losses from their investment in IBM stock.... In so ruling, the Second Circuit became the first circuit court since the Supreme Court's decision in Fifth Third Bancorp v. Dudenhoeffer ... to allow such a claim to survive a motion to dismiss. According to media reports, this has sparked renewed hope within the ERISA plaintiffs' bar in the viability of these claims." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)] (Proskauer's ERISA Practice Center)
[Opinion] The DOL's Own Reasoning Supports MEPs Being 'Open'
"The Department wants the MEP sponsor to perform a 'substantial employment function' to preserve ERISA's fundamental employment based purpose, and does not see how that exists in commercial practice.... [T]his concern is really alleviated in the retirement plan market ... Unlike the AHP sponsor, the MEP sponsor itself is, after all, still a retirement plan Sponsor, and is subject to the MEP service crediting rules for participation, vesting and benefit accrual ... [M]aintaining the plan is, in itself, a 'substantial employment function' ... [T]he real concern should be ... whether the pecuniary interest of the fiduciary overwhelms (and becomes primary over) the interests of the plan and the participants in its dealings with the plan. However, the operation of the prohibited transaction rules prevent this from being so." (Business of Benefits)
[Opinion] 'Phased Retirement' Requirement Would Be Lump of Coal for Plan Sponsors
"The newest proposed federal mandate comes from individuals who have never served as a plan sponsor or worked in human resources.... The authors recommend workers be given a legal right to phased retirement. To qualify, it seems that an employee would only need to be working for an employer with 20 or more workers -- no minimum age, no minimum completed service, no performance/productivity requirements, no other requirement." (Plan Sponsor Council of America [PSCA])
D.C. Court of Appeals: Delta Pilots Cannot Recover Fiduciary Breach Damages from Plan's Post-Termination Investment Gains (PDF)
"The Corporation argues that it is entitled under Section 1344(c) to any post-termination increase in the value of pension plan assets. In other words, the Corporation reasons, Congress has already decided who benefits or suffers the loss from a change in the value of plan assets once that plan has been terminated. Therefore, the Corporation concludes that the pilots cannot recover that money as equitable relief for an alleged breach of fiduciary duty. We agree.... The pilots' request for post-termination investment gains is fundamentally flawed." [Lewis v. PBGC, No. 17-5068 (D.C. Cir. Dec. 21, 2018)] (U.S. Court of Appeals for the District of Columbia Circuit)
[Opinion] Investment Company Institute Comment Letter to DOL on Proposed Regs Defining 'Employer' Under Section 3(5) of ERISA (PDF)
10 pages. "[ICI urges] the Department to interpret the definition of employer more broadly, specifically by expanding the category of persons able to act indirectly in the interest of employers ... Any concerns the Department may have with respect to permitting MEP sponsorship by financial services firms can be mitigated by using established methods for ensuring both the legitimacy and qualifications of the MEP sponsor and protection from conflicts of interest. Failure to expand the interpretation as recommended likely will result in market distortions and inefficiencies, to the detriment of retirement savers." (Investment Company Institute [ICI])
Comprehensive Retirement Savings Enhancement Bill Introduced
"A news release issued by Sen. Portman's office acknowledged that this legislation is intended to establish 'a foundation for a broader bipartisan, bicameral retirement policy debate in the next Congress' (2019). The news release further notes that '[t]he senators will continue their efforts to improve this legislation.' It also identifies a wide spectrum of interest groups and retirement industry players whose support the senators claim to have." (Ascensus)
One Year On: Oregon Debuts First State-Sponsored IRA Plan for Private Sector Employees, Individual Workers
"Although 1,800 employers have registered and nearly 22,000 employees are contributing, the plan's greatest challenge thus far involves implementing payroll deductions: only about a third of employers that have enrolled in the program have actually submitted employee contributions ... Still, OregonSaves saw a 95% retention rate in its inaugural year, with 93% of enrollees maintaining the default 5% contribution and 2% increasing their rate to an average of 10%. Only 5% of enrollees decreased their deferral rate." (Corporate Insight)
Senators Introduce Retirement Savings Bill Expanding Options
"The proposed Retirement Security and Savings Act includes more than 50 provisions aimed at improving coverage with small employers and among part-time workers. It would also reduce barriers to lifetime income options and allow employees to keep retirement savings in qualified plans beyond the current age limit of 70-1/2." (Pensions & Investments)
[Opinion] What the Fed Does Next Could Save Your 401(k) -- or Drive It Even Lower
"Depending on what policy makers do and say, stocks could pull out of the dive that has left us worried about our 401(k) retirement savings.... Since most people expect the Fed to go ahead with its fourth 0.25 percentage point increase of 2018, the market's reaction shouldn't be too negative. (Quarter-point changes are the norm, except when drastic action is required.) However, a decision to pause would more than likely trigger a rally in stocks and bonds as investors breathe a big sigh of relief." (The Boston Globe; subscription may be required)
New 401(k) Legislation Could Bring Big Changes For Retirement Savers
"H.R. 88 ... would allow any participant to convert their retirement savings into a stream of income.... H.R. 4524, titled 'Retirement Plan Simplification and Enhancement Act of 2017' ... [includes] a lifetime income portability option. Under the portability option, participants can avoid early withdrawal penalties and taxes of a discontinued sponsored plan by moving their funds to another plan." (Forbes)
Retirement Savings Reform a Focus for the Trump Administration and Congress
"The [DOL Association Retirement Plan] proposal differs in significant ways from several legislative proposals introduced in Congress. For one thing, the Department's proposal is more limited because it relies solely on the Department's authority to promulgate regulations administering title I of ERISA.... As such, it does not appear that the NPRM -- as currently drafted -- is likely to have much of a substantive impact on ongoing legislative efforts surrounding Open MEPs." (Squire Patton Boggs)
Retirement Industry Trends to Watch in 2019 (PDF)
"The enactment of legislation could usher in greater interest and adoption of guaranteed income options for 401(k) and other DC retirement plans.... [R]ecord-keepers will be under increasing pressure ... DC record-keepers that integrate with HSAs will have an advantage ... A more challenging stock market along with steadily rising interest rates ... could drive greater proliferation of, and demand for, products offering downside protection, stable value contracts, insurance products such as deferred annuities and guaranteed income benefits, alternative funds and real asset funds." (Institutional Retirement Income Council [IRIC])
[Opinion] American Benefits Council Letter to New Jersey Bureau of Securities: State Fiduciary Standards Should Not Apply to ERISA Plans
"[The Council is] concerned that state action on this matter could quickly evolve into a major threat to the workability of employee benefit plans maintained by large multi-state plan sponsors because different states' rules will inevitably adopt standards different from each other and different from the federal standards imposed through ERISA. ERISA explicitly protects employee benefit plans from this type of disruption." (American Benefits Council)
[Opinion] National Federation of Independent Businesses Comment Letter to DOL on Proposed Regs on Association Retirement Plans and MEPs (PDF)
17 pages. "NFIB continues to object to the control and commonality-of-interests tests as a misconstruction of section 3(5) of ERISA. The Department should revise its proposed rule ... to allow an association to demonstrate in ways other than 'control' that the association acts in the interest of the employers in the association and should recognize small business size as itself a commonality of interest." (National Federation of Independent Businesses [NFIB])
ERISA Class Action Litigation over Fees in Health and Welfare Plans
"Although the primary issue is whether these plans were improperly designated as governmental entity plans ... the key issue for health-plan fiduciaries is whether Atrium retained a costly, affiliated entity as a third-party administrator for its health plan and failed to ensure that participants paid only 'reasonable' fees for services, co-insurance and deductibles." [Shore v. Charlotte-Mecklenburg Hospital Authority (d/b/a Atrium, f/k/a Carolinas Healthcare System), No. 18-961 (M.D.N.C. complaint filed Nov. 19, 2018)] (McDermott Will & Emery)
No, Retirement Plan Participation Isn't Plummeting
"In 1979, roughly half of full-time workers reported being offered a retirement plan at work. In 2013, the figure was again about one-half. But from 2013 through 2016 reported retirement plan coverage dropped from 47% to 37%, with only a modest rebound to 38% by 2017.... What actually happened has very little to do with pension coverage and a lot to do with how we measure pension coverage." (Andrew Biggs, in Forbes)
PBGC's 2018 Annual Report Heralds Improved Financial Position
"On November 16, 2018, the [PBGC] released its Fiscal Year 2018 Annual Report, showing an $11.2 billion improvement in the multiemployer program and a $13.4 billion improvement in the single employer program. The single employer program, no longer in deficit, now has a $2.4 billion surplus.... [The authors] discuss what PBGC's FY2018 Annual Report tells us about the financial condition of and prospects for the single employer program and briefly discuss the financial condition of the multiemployer program." (October Three Consulting)
Tweaked Year-End Tax Relief Package Includes Retirement and Health Care Provisions
"Items in this legislation include ... [1] Provisions from the House-passed Family Savings Act -- including expansion of 529 savings accounts -- as well as the Senate Finance Committee-passed Retirement Enhancement and Savings Act.... [2] Delays the Medical Device Tax for five years, delays the Health Insurance Tax for two years, delays the Cadillac Tax for one year, and permanently repeals the Tanning Tax." (Committee on Ways and Means, U.S. House of Representatives)
CBO Cost Estimate for H.R. 88: The Retirement, Savings, and Other Tax Relief Act of 2018, and the Taxpayer First Act of 2018
"CBO and JCT estimate that enacting H.R. 88 would increase on-budget deficits by more than $5 billion in at least one of the four 10-year periods beginning in 2029. CBO and JCT estimate that enacting the legislation would not increase net direct spending by more than $5 billion in any of the four consecutive 10-year periods beginning in 2029." (Congressional Budget Office [CBO])
Governmental Plan Status is Key Issue in Pending Lawsuit
"The Complaint identifies the following reasons why Atrium's plans do not meet the governmental plan definition: [1] Atrium's board is not publicly nominated or elected; [2] Atrium's board is not controlled by a state, political subdivision, or any other governmental entity; [3] No state, political subdivision, or any other governmental entity has the powers and interests of an owner with respect to Atrium; [4] Atrium's employees are not treated as employees of any state, political subdivision, or any other government entity; [5] Atrium receives no funding from the state or any political subdivision; and [6] Atrium does not possess the sovereign powers of a state, political subdivision, or any other governmental entity." [Shore v. Charlotte-Mecklenburg Hospital Authority (d/b/a Atrium, f/k/a Carolinas Healthcare System), No. 18-961 (M.D.N.C. complaint filed Nov. 19, 2018)] (Ice Miller LLP)
States Boost Access to Retirement Plans, Seek to Close Savings Gap
"Feasibility studies for the programs project CalSavers could amass $28.4 billion in assets within six years and Oregon and Illinois could reach $5 billion and $10 billion, respectively, within a decade.... Oregonians have amassed $10 million, versus the at least $100 million projected by the feasibility study by the end of the first year. Of the 30,000 companies without a retirement savings plan, about 650 are currently making payroll contributions." (The Wall Street Journal; subscription may be required)
States Expected to Ramp Up 'Best Interest' Efforts Early in 2019
"As many as 14 states want to put a 'fiduciary duty' on insurance agents via new regulations ... The regulation chatter is heaviest in big, populous states where progressives are in key political posts -- such as California and New Jersey ... New York is furthest along with a best interest rule that covers annuities and life insurance. It is slated to take effect in August 2019 for annuities and six months later for life insurance." (InsuranceNewsNet.com)
Addressing Social Security's Solvency While Promoting High Labor Force Participation
"Income and payroll taxes may cause households to retire earlier than maximal society-wide efficiency might favor.... Social Security reforms that seek to encourage longer careers might be able to deliver higher tax revenues with less sacrifice of household utility than would otherwise be the case.... The Social Security benefit formula, through its indexing of past earnings, tends to leave few incentives to work past the early 60s.... [A] case can be made for re-examining the indexing formula." (Michigan Retirement and Disability Research Center, Univ. of Michigan)
California Supreme Court Hears First Challenge to Public Employee Pension Reform
"The state Supreme Court, with four similar cases on the backburner, gave few signs during oral arguments on a labor-union challenge to Gov. Brown's pension reform yesterday that it's ready to take on the 'California Rule' preventing pension cuts." (Calpensions)
Supreme Court Hears Oral Argument on Differing State Tax Treatment of Federal/State Government Retirement Benefits
"On December 3, 2018, the United States Supreme Court heard oral argument in Dawson v. Steager, a case addressing West Virginia's personal income tax regime, which exempts state employee retirement benefits without offering the same exemption to federal employee retirement benefits.... At oral argument, several justices expressed skepticism about the West Virginia scheme.... The decision is expected to have implications for state statutes that distinguish between federal and state government employee retirement benefits." (Kilpatrick Townsend)
Combining Small 401(k) Accounts Helps Preserve Retirement Saving
"Consolidation helps the employees accumulate a more adequate level of retirement saving, because research shows that hitting the $20,000 milestone makes participants much more likely to preserve their balances. And consolidation helps sponsors fulfill their fiduciary duty and cut aggregate plan costs by reducing the number of stranded accounts. Consolidation helps providers to increase assets under management and reduce the headaches associated with mandatory distributions, stranded accounts, and uncashed checks for missing participants." (Alicia Munnell, via MarketWatch)
[Opinion] New PBGC Director Approved
"Gordon Hartogensis will need more than 'successful entrepreneurial experiences' to lead the PBGC through these minefields: [1] Mutiemployer plans slashing benefits with no bailout in sight; [2] Single Employer plans terminating apace due to extortionate premiums; and [3] Small plans going through routine standard terminations subjected to full-cavity-search audits that coalesce the most intrusive practices of the DOL, IRS, and TSA.... [P]ossibly a pension outsider could bring common sense solutions to the disaster that pension insiders have allowed to fester." (Burypensions)
More Support for Universal Savings Accounts
"Republicans in Congress adopted the idea and included USAs in their Tax Reform 2.0 package, which passed the House in September. Individuals would deposit after-tax funds in the accounts, and then the earnings would grow tax-free and could be withdrawn at any time for any reason with no taxes or penalties. USAs would allow Americans to save without the restrictions and complexity of other vehicles." (Cato Institute)
Open MEPs: A Promising Way to Close the Coverage Gap (PDF)
12 pages. "66% of small business owners who don't offer a retirement plan are likely to consider an open MEP. And the same proportion of small business owners who do offer a retirement plan say they would consider switching to an open MEP.... [This paper will] outline the current state of retirement readiness in the United States, provide an update on the latest efforts to expand MEPs and summarize the research ... conducted with small business owners." (Empower Retirement)
California Pension Reform Goes Before State High Court
"The high stakes case tests the so-called California Rule, the legal precedent that forbids California government agencies from reducing retirement benefits without offering workers some kind of compensation to offset a loss in income. If the court sides with [Gov. Jerry Brown], unions worry that future city managers and governors will be emboldened to cut benefits they promised to their workers." (San Jose Mercury News)
CBO's Long-Term Social Security Projections: Changes Since 2017 and Comparisons With the Social Security Trustees' Projections (PDF)
20 pages. "The projected 75-year actuarial balance ... has not changed as a percentage of gross domestic product (GDP) since last year ... As a percentage of taxable payroll, the projected 75-year actuarial balance has improved slightly ... CBO projects larger deficits in Social Security's finances than do the Social Security Trustees. That difference is largely explained by CBO's and the trustees' different projections of several key inputs into estimates of the system's finances: the population, earnings subject to Social Security payroll taxes, real interest rates." (Congressional Budget Office [CBO])
PBGC OIG Semiannual Report to Congress, for the Period April 1, 2018 to September 30, 2018 (PDF)
45 pages. "[In this report, OIG has] provided the most important management and performance challenges facing PBGC.... [1] Information security ... [2] Modernization of PBGC's key benefits-related information technology systems ... [3] Transparency and accountability of professional services contracting." (Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC])
Can ERISA Plans Require That Fiduciary Claims Be Arbitrated? Should They? (PDF)
"Despite ERISA's endorsement of arbitration for certain issues, breach of fiduciary duty claims, which tend to involve greater damages and tend to attract the most media attention, are not arbitrated. One possible reason is that ... arbitration is not all it is chalked up to be -- for sophisticated fiduciary disputes, arbitration may in fact be just as time consuming, just as expensive, and less likely to lead to a just outcome." (Steptoe & Johnson LLP)
Understanding the Central States Pension Plan's Tale of Woe
"Had the plan been well-run and properly funded, and had principles of multi-employer plan design and the relevant legislation been designed to ensure long-term solvency rather than relying on new generations of contributors to make up for losses, Central States would have weathered these storms. But Central States was missing all this.... They had flaws in their plan design. And they were neither well-run nor properly funded." (Forbes)
Edison Wants Denial of 401(k) Expert Fees to Stand
"Edison International is urging a federal appeals court to uphold a ruling denying a request to recover nearly $1 million for expert witnesses used during an 11-year litigation.... The case had two trials and multiple trips to appeals courts. Recently, a class of 20,000 Edison workers won $13.2 million in damages and the company agreed to pay $5.8 million in attorneys' fees." [Tibble v. Edison Int'l, No. 18-55974 (9th Cir. appellees' brief filed Nov. 29, 2018)] (Bloomberg BNA)
USC Calls on Supreme Court to Undo ERISA Arbitration Ruling
"The University of Southern California petitioned the U.S. Supreme Court Thursday to establish a rule that would prevent retirement plan participants from filing class-action lawsuits with regard to ERISA breach-of-fiduciary-duty claims. The petition stems from a decision reached by the 9th U.S. Circuit Court of Appeals in July that said USC cannot compel participants in two retirement plans to accept arbitration rather than proceed with a trial to address ERISA complaints against university fiduciaries." [Munro v. Univ. of So. Cal., No. 17-55550 (9th Cir. July 24, 2018; cert pet. filed Nov. 29, 2018)] (Pensions & Investments)
Lame Duck House Tax Proposal Includes Numerous Retirement Plan Provisions
"The Retirement, Savings, and Other Tax Relief Act of 2018, in addition to including several provisions related to employee benefits, extends various expiring provisions, contains disaster relief provisions ... includes special provisions for start-ups, and technical corrections to the Tax Cuts and Jobs Act of 2017. The legislation breaks no new ground; its provisions were included in either the Retirement Enhancement Savings Act of 2018 (RESA) or the Family Savings Act." (The Wagner Law Group)
Hatch, Brown Commit to Continued Work on Multiemployer Pension Crisis Past Nov. 30
"When the Joint Select Committee was created, it was expected members would vote on a package by this Friday. [Co-Chairs Orrin Hatch (R-UT) and Sherrod Brown (D-OH)] say that while they have made significant progress and a bipartisan solution is attainable, more time is needed and the committee will continue its work." (Joint Select Committee on Solvency of Multiemployer Pension Plans)
Panel Won't Meet Deadline on Fix for Multiemployer Pension Plans
"A bipartisan committee of lawmakers will miss a Friday deadline to reach an agreement on addressing financial shortfalls of multiemployer pension plans, meaning Congress is less likely to take up legislation on the matter before year's end. Both Republicans and Democrats on the panel said Thursday they nonetheless were close to agreeing on a proposal, and negotiations were expected to continue." (The Wall Street Journal; subscription may be required)
New Jersey Senate Hearing Scheduled on Secure Choice Savings Program
"The Labor Committee of the New Jersey Senate will hold a hearing Dec. 3 on legislation that would create the New Jersey Secure Choice Savings Program, a state-run retirement plan for private-sector employees whose employers do not offer a retirement plan. Under the proposed plan, those employees would be automatically enrolled in an IRA with a standard payroll deduction of 6% of wages." (American Society of Pension Professionals and Actuaries [ASPPA])
Rescue for Failing Multiemployer Pensions Not Expected from Joint Select Committee
"A November 30 deadline was set to report bipartisan legislation. But Republican and Democrat members could not agree on an 'equitable' solution, despite getting 'close' to a compromise ... The Committee's inability to report legislation comes in spite of an array of economists that have warned of massive macroeconomic implications of letting the pensions, and the [PBGC] fail." (BenefitsPro)
[Opinion] 'Work Hard. Save Easy' -- OregonSaves Retirement Program Is Off to a Promising Start
"Since the program's Wave One rollout began, OregonSaves has been adding approximately 1,000 employees per week. The program now has more than 44,000 employees enrolled. That number will climb rapidly in the coming years, because the majority of Oregonians without access to a plan work at small businesses." (Tobias Read, Oregon State Treasurer, via Georgetown University Center for Retirement Initiatives)
House Tax Bill Would Make Several Changes to IRAs and Retirement Plans
"A tax bill has emerged from the House Ways and Means Committee, extending certain expiring tax provisions, addressing provisions of 2017 tax reform legislation and several recent disaster events (hurricanes and California wildfires), and proposing additional provisions that would affect tax-advantaged retirement savings arrangements. H.R. 88, titled the 'Retirement, Savings, and Other Tax Relief Act of 2018,' is being reported as having bipartisan support.... The following provisions of this legislation would in some manner impact retirement savings arrangements." (Ascensus)
[Opinion] Multiemployer Pensions: Waiting for the Bailout
"[W]hat is being proposed is a partial bailout, and plan participants in failing plans need to realize that the alternative to a partial bailout is not a full bailout but getting a hell of a lot less than that partial bailout. Even if they managed to get a few top-ups for a few years from a congenial Congress and President (no matter the party), eventually the money situation will be that it will not be sustainable. So it won't be sustained. There are those where surviving just a couple more years will be good enough. But for the pension plan as a whole... they need something more long-term." (STUMP)
Sweeping Tax, Retirement Bill Released in House
"The bill directs the IRS commissioner to submit a plan to restructure the agency, with a focus on boosting taxpayer service and cybersecurity, by Sept. 30, 2020.... [It also] includes provisions on multiple employer plans; pooled employer plans; rules relating to election of safe harbor 401(k) status; certain taxable non-tuition fellowship and stipend payments treated as compensation for IRA purposes; and repeal of maximum age for traditional IRA contributions." (ThinkAdvisor)
Pension Reform and Return to Work Policies
"Existing research has shown that retirees are sensitive to the Social Security earnings test, which restricts the amount of earnings some beneficiaries can receive.... [This study uses] return-to-work rules limiting the number of hours of employment in a state's public pension plan and administrative data on employment and retirement to determine the rules' effects on retirement decisions and post-retirement labor supply.... [I]ncreases in the maximum number of hours of post-retirement employment lead to no change in retirement benefit collection and to increases in part-time work among retirees. As such, these policies appear to be binding on the labor supply decisions of some employees." (National Bureau of Economic Research [NBER]; purchase required for full document)
 
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