Retirement Proposals on the Table for Trump Administration

There is a question whether retirement policy is a priority for president-elect Donald Trump, but there are many proposals out there for his administration to consider.

By Rebecca Moore | November 15, 2016
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Some discussion topics during president-elect Donald Trump’s campaign included tax reform, jobs, Social Security, and the Affordable Care Act (ACA), noted David Levine, principal, Groom Law Group, Chartered, during a webcast sponsored by the Plan Sponsor Council of America (PSCA) titled “Post-Election Washington Update.”

He pointed out that potential proposals in tax reform that could affect retirement plans include lowering or raising contribution limits, changing the tax benefits of retirement plans, Roth requirements, and setting lifetime limits on retirement savings.

“We’ve seen some of these things before. Under George H.W. Bush, contribution limits were lowered. And, a reduction in tax benefits has been proposed by both parties,” he said. “Lawmakers see retirement policies as a way to fund other priorities.”

However, Levine noted that while health care is at the front and center of Trump’s priorities, there’s a question whether retirement is a priority.

There are many retirement policy proposals on the table, and it is uncertain whether anything can get approved during the lame duck session.

For example, Brigen Winters, principal, Groom Law Group, Chartered, noted that the Senate Finance Committee just approved a markup of the Retirement Enhancement and Saving Act (RESA). RESA includes a proposal for pooled employer plans, or open multiple employer plans (MEPs). It would treat them as one plan under the Employee Retirement Income Security Act (ERISA) and take care of the “one bad apple” rule to prevent one participating employer from disqualifying the whole plan. “This proposal has a lot of bipartisan steam, so if not enacted this year, I think we will see it enacted eventually,” Winters said.

RESA also includes a proposal to require lifetime income estimates at least annually on participants’ retirement plan statements; a fiduciary safe harbor for the selection of lifetime income providers for retirement plans; limits on stretch IRAs that allow beneficiaries to take out retirement plan assets over their lifetime; a proposal to allow more time for participants who terminate with an outstanding loan to rollover the loan and pay it off without it being a deemed distribution; as well as other proposals that would affect nondiscrimination rules, the automatic enrollment safe harbor default rate and the treatment of 403(b) custodial accounts upon plan termination.

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