401(k) and the Election

The Federal framework necessary to allow the employer-sponsored defined contribution system to reach its full potential was implemented with a series of legislative changes that began in the mid-1990s and culminated with the passage of the Pension Protection Act of 2006. Unfortunately, achievement of that potential has been delayed by the financial turbulence starting in 2007. Further, the recent financial volatility led to calls from important policymakers for a major overhaul of the system and even its replacement. As long as one party controlled the Presidency, the Senate, and the House of Representatives, significant change was a possibility. However, with divided government, it is unlikely that there will be major legislative change affecting the system anytime soon. That’s a good thing. We need an extended period of stability to take full advantage of the legislative changes we worked so hard to achieve. Now we will have it.

At the same time, the DOL, IRS, and even the SEC will continue to regulate and legislators will continue to offer tune-up solutions. Even in this more benign environment, policymakers will continue to need the plan sponsor perspective.