House Passes the SECURE Act
The House of Representatives, on May 23, passed the Setting Every Community Up for Retirement Enhancement Act of 2019 (the “SECURE Act”) on a vote of 417-3. The House vote shows the bipartisan support for meaningful retirement reform. At this point, however, it remains unclear on whether the Senate will bring up the SECURE Act for a full Senate vote. Nonetheless, Congressional watchdogs are cautiously optimistic that retirement reform will happen this year. That is because the Senate has introduced two bills this year, the Retirement Security Savings Act, and the Retirement Enhancement and Savings Act, with many overlapping provisions as the SECURE Act. The hope is that House and Senate leaders can work out the differences between the three bills and present a unified bill to the President before the end of the year.
Some of the more significant changes the SECURE Act would make to defined contribution plans include:
- offering more generous tax credits for small employers starting a retirement plan, and offering a new tax credit for small employers to add an automatic enrollment feature to an existing plan;
- requiring an annual life income disclosure be made to participants, showing the lifetime monthly payments a participant would receive based on his/her account balance
- requiring plans to cover part-time employees who work at least 500 hours of service (and age 21) in three consecutive years;
- implementing rules to encourage employers to add an annuity distribution option in 401(k) plans;
- shortening the period of time, to 10 years, in which certain beneficiaries would be required to receive post-death required minimum distributions (RMD); and
- repealing the age 70-1/2 prohibition on making traditional IRA contributions, and increasing the RMD age from 70-1/2 to 72.
Department of Labor Releases Regulatory Agenda
The Department of Labor (DOL) recently released its Spring Regulatory Agenda of what it wants to accomplish this year. The Employee Benefits Security Administration, the DOL division with regulatory oversight of retirement plans, is scheduled to issue a revised fiduciary rule, and a proposed rule in connection with the electronic delivery of notices under ERISA.
The DOL is looking to revise its investment advice fiduciary rule after the Obama DOL saw its previous version vacated by the Fifth Circuit Court of Appeals. In addition, the DOL, in response to the President’s Executive Order last year, is expected to release a proposed rule addressing the electronic delivery of notices required under ERISA. The goal would be to streamline and reduce the burdens imposed on employers and plan fiduciaries associated with providing notices to participants.
Union Bank will keep you informed about the SECURE Act, other related retirement legislation, and relevant regulatory developments. If you have any questions, please do not hesitate to contact a Union Bank Relationship Manager.