With a new Congress and President arriving in Washington, Union Bank & Trust expects 2017 to be a busy year for retirement plan legislation and regulatory action. As a result, the following is a brief overview of possible major developments to watch in the retirement plan area in 2017.
- Fate of DOL Fiduciary Rule/Prohibited Transaction Exemptions. With the Department of Labor's expanded definition of "fiduciary" and related prohibited transaction exemptions set to become effective on April 10, the issue is whether a Republican Congress and President will repeal the DOL guidance, modify it, or allow it to become effective as is. While there are several avenues that could be taken to modify or repeal the guidance, the most recent development involves a bill introduced in the House of Representatives which would delay the DOL guidance for two years. According to Congressman Joe Wilson, who introduced the bill, the delay would allow Congress and President-elect Trump reevaluate the guidance. Union Bank will continue to monitor and keep you updated on the status of the DOL guidance.
- Retirement Reform on the Way? It has been reported that the House Ways & Means Committee Republicans have formed working groups as a first step toward enacting comprehensive tax reform. Committee chair Kevin Brady has asked for recommendations on how to make it easier for people to save for retirement, and how to make retirement plans less complex while broadening their use by workers. Depending on the ultimate goals of the new Congress and President, these efforts could lead to significant changes to 401(k), 403(b), and/or 457(b) plans.
- Retirement Enhancement and Savings Act of 2016 ("RESA") may have Broad Bipartisan Support. Although it is unclear on how the new Congress will approach RESA, which was placed on the Senate's legislative calendar late last year, it expects to have broad bipartisan support, and therefore, is worth tracking. If eventually made into law, RESA would include several popular improvements to pension law including the following:
- Small employers would be permitted to sponsor a plan along with unrelated employers, thus allowing employers to share the costs of maintaining a plan.
- The hardship distribution rules would be modified, in part, to eliminate the requirement that a participant be prohibited from making deferrals for six months after the distribution.
- Employers would be required to provide participants with an estimate of the amount of the monthly income their account balance would generate in retirement.
Union Bank will keep you informed of these and any other relevant matters that may affect your plan in 2017. If you have any questions, please contact your Union Bank Relationship Manager.