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PSCA Executive Reports

October 29, 2019

Retirement Legislation

  • Nondiscrimination Rules. Senators Ben Cardin (D-MD) and Rob Portman (R-OH) have reintroduced the Retirement Security Preservation Act (S. 2352). The bill addresses nondiscrimination rules for “frozen” defined benefit plans, which typically have more highly compensated, senior employees than active defined benefit plans. The imbalance in favor of highly compensated workers causes frozen plans to inadvertently run afoul of nondiscrimination rules. A press release states that the legislation will help over 450,000 plan participants. Related language is included in the SECURE Act, and Senators Cardin and Portman stated that they introduced this stand-alone legislation in the hopes that it could pass by itself if the SECURE Act as a whole cannot.
  • Auto-IRA Legislation. Senator Sheldon Whitehouse (D-RI) has introduced the Automatic IRA Act (S. 2370) to require employers with ten or more employees to automatically enroll their employees in an IRA if the employer does not already sponsor a retirement plan. While mandatory for employers, employees would be allowed to opt out. A press release states that nearly 90% of small- and mid-size employers that do not currently sponsor a retirement plan support the idea of auto-IRA programs. A number of states have created state-facilitated auto-IRA programs modeled on the federal legislation. 
  • Savings Legislation. On Friday, July 26, Senator Cory Booker (D-NJ) and Representative Ayanna Pressley (D-MA) reintroduced legislation that would create a savings account for every American at birth. The American Opportunity Accounts Act (S. 2231; H.R. 3922) aims to address wealth inequality by creating an account seeded with $1,000 of taxpayer money for every American child at birth. The government would regularly contribute additional amounts, up to $2,000 annually, based on family income. At age 18, children could access the funds for allowable expenses, such as buying a home or paying college tuition. The accounts would be managed by the Treasury Department and paid for by changes to the estate tax. Sen. Booker has previously introduced this legislation, but it has not advanced. 
  • Rep. Morgan Griffith (R-VA) introduced H.R. 4181 to allow employees to withdraw funds penalty-free from their workplace retirement plan in the event their employer declares Chapter 11 bankruptcy and the workers are not paid. Rep. Griffith represents rural southwestern Virginia, home to coal mines operated by the troubled mining company Blackjewel. 
  • Sen. Richard Burr (R-NC) introduced the Compassionate Retirement Act (S. 2495) to allow persons with certain terminal illnesses to make penalty-free withdrawals from their retirement accounts.
  • Sen. Mike Enzi (R-WY) introduced a resolution in support of National Retirement Security Week.

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