March 2017

Coverage of legislative and regulatory developments on savings and retirement issues

The Latest

Senate Votes on CRA Resolution on State Run Retirement (Political Subdivisions)

On March 30, the Senate voted on H.J. Res. 67 to override the Department of Labor’s (DOL) regulation regarding savings arrangements established by state political subdivisions for non-governmental employees. The resolution was passed in a 50-49 vote. The Senate has yet to vote on the CRA for full state-run retirement safe-harbor regulation.

SIFMA submitted letters of support for the use of Senator Hatch’s joint resolutions, S. J. Res. 32 and S. J. Res. 33, to override the Department of Labor’s (DOL) regulation regarding savings arrangements established by states for non-governmental employees. The final rule was published in the Federal Register on August 30, 2016. SIFMA affirmed that allowing states to offer plans that are not afforded the same level of legal protections will significantly threaten the retirement security of millions of Americans. Furthermore, the DOL's rule will do nothing to address the underlying causes of undersaving and fails to protect investors.

Department of Labor sends Final Fiduciary Rule Delay to Office of Management and Budget

On March 28, the Department of Labor (DOL) sent the final Fiduciary rule regarding the 60-day delay of the applicability date to the Office of Management and Budget (OMB) for review. Once approved, the Fiduciary rule will be sent back to DOL to be published in the Federal Register.



Senate HELP Nomination Hearing of Alexander Acosta to be Labor Secretary

On March 22, the Senate Health, Education, Labor and Pensions (HELP) Committee held a nomination hearing for Alexander Acosta to serve as United States Department of Labor (DOL) Secretary. At the hearing, Acosta stated his priorities for DOL as reducing the skills gap, providing good and safe jobs, and advocating for the American workforce. Chairman Alexander stated that the DOL under the Obama Administration “unleashed a regulatory avalanche that held job creators back.”  He added that the Fiduciary rule makes it more expensive for the average worker to obtain investment advice. Read more

Bipartisan, Bicameral Legislation is Introduced to Assist Small Businesses Offer Retirement Plans

On March 22, bipartisan legislation was introduced in both the House and the Senate to reduce duplicate filing costs for small businesses looking to offer retirement plans to their employees. The legislation was introduced in the Senate by Sens. Mark R. Warner (D-Va) and Susan Collins (R-Maine). In the House, the legislation was sponsored by Rep. Linda Sánchez (D-Calif.) and Rep. Phil Roe (R-Tenn.). In the 114th Congress, the legislation was unanimously approved by the Senate Finance Committee.  The bill directs the Department of Labor (DOL) and the Treasury Department to allow employers and sole-proprietors participating in retirement plans administered in the same way to file a single aggregated Form 5500, a required annual return that provides important compliance information to DOL and Treasury.

Senator Sherrod Brown Releases Retirement Plan Proposals

On March 3, Sen. Brown (D-Ohio) unveiled a new plan, Working Too Hard for Too Little, to restore the value of work in the United States. Sen. Brown’s plan focuses on expanding opportunities for independent contractors to create their own retirement plans, without outrageous costs and fees. Sen. Brown emphasized on the need to expand access to retirement programs for part-time workers, low-wage workers, and small business owners.  He also included his support for Open MEPs, myRA, and a refundable Saver’s Credit.


Regulatory Watch

IRS and DOL Issue Enforcement Relief for DOL Fiduciary Rule “Gap” Period

On March 10, the DOL issued Field Assistance Bulletin No. 2017-01, which provides a temporary suspension of the enforcement policy on the fiduciary duty rule in light of the approaching April 10 applicability date and the proposed 60 day extension of that date. In the event the DOL issues a final rule for the delay after April 10, the DOL will not initiate an enforcement action because an adviser or financial institution.

The IRS then issued Announcement 2017-4 providing relief from certain excise taxes under Section 4975 to conform to the temporary relief the DOL issued.

SIFMA Submits Comments to DOL in Support of 60-Day Fiduciary Rule Delay

On March 14, SIFMA submitted a comment letter to the Department of Labor on its proposed rule to extend the applicability date of its fiduciary rule by 60 days. SIFMA president and CEO, Kenneth E. Bentsen, Jr. explains, “the delay must be implemented post-haste to avoid a potential train wreck for tens of millions of retirement savers.” SIFMA makes the following arguments in support of the delay: 1) the delay is necessary to avoid customer confusion; 2) the delay is necessary to address the questions in the president’s memo; 3) the delay is necessary because the Department’s data is currently flawed; 4) the delay must become effective on date published.


State Issues

ArkansasSB 236, which would establish the Arkansas Small Business Voluntary Retirement Program, a mandatory-on-employer state run retirement plan, failed 3rd reading March 16.

California.  The Assembly Budget Subcommittee heard the Deputy Treasurer’s $170M budget request for the Secure Choice Program for now through 2020 – 2021.  The request could be held open until May.

California.  The California Secure Choice Retirement Savings Investment Board met on February 27 and March 27.  At the February meeting, the agenda included legal and legislative updates and two resolutions for consulting and legal services, as well as a discussion of the two federal CRA bills.  The Board expressed plans to move forward regardless of the DOL safe harbor, and outside counsel argued for potential reliance on a 1975 ERISA safe harbor provision.  The Board also discussed a possible need to amend the law. 

At the March meeting, the board stated that they would announce the hire of a new executive director at the next meeting, discussed a possible RFP, and reaffirmed the position that moving forward may be possible under the 1975 ERISA safe harbor.  It was also reported that the Attorney General and Treasurer were working together on a legal analysis.

ColoradoHB 1290, which would establish a state run retirement savings plan for private-sector employees, has a hearing in Business Affairs & Labor on April 13.

HawaiiHCR 38, re-referred to Finance on March 29, calls on the Legislature to convene a retirement savings working group to investigate and identify strategies to promote greater retirement savings for private sector employees. 

IllinoisHB 2360, to amend the IL Secure Choice Program to require the Board to select a default contribution rate of 3% to 6% of an enrollee’s wages (rather than 3%) and begin the Program in 2018, rather than July 2017, passed the House and will be heard for the 3rd time in the Senate March 30.

Minnesota.  Management and Budget has released a study entitled State-Administered Private Sector Employee Retirement Savings.

MontanaSB 346, to enact the Montana Optional Retirement for Employees Savings Act, passed its 2nd Committee March 29.

NevadaAB 430, which would create the NV Task Force on Retirement Security to conduct a comprehensive examination the retirement security of Nevadans, was intro’d and referred to Committee March 27.

New MexicoSJM 12, as amended, would request the state treasurer to establish a retirement income security task force to study the preparedness of New Mexicans to retire in a financially secure manner, including a study of retirement savings vehicles for private-sector employees having limited or no access to workplace retirement savings.  The bill passed both houses as of March 17.  A companion bill, HJM 9, passed the House as amended Feb. 21 and was reported Do Pass from Senate Corporations & Transportation March 15.

New York StateS. 4655, which would establish a task force to study the feasibility of creating a NYS sponsored retirement security program for private sector workers, was referred to Civil Service & Pensions February 23.

New York StateA. 4982 / S. 4344 would establish the Secure Choice State Run Retirement plan.  A. 4982 was referred to Codes March 22; S. 4344 was introduced and referred to Civil Service & Pensions February 10.

Oregon.  The Oregon Retirement Savings Plan Board met on March 14; the meeting included several progress updates from the Board.

OregonHB 2163, which would amend the law restricting deductions from employee pay to permit opt-out – rather than fully voluntary opt-in – deductions from employee’s wages for contributions to certain retirement plans (such as those being developed by the state for private workers), had a hearing in Business & Labor March 1.   

Rhode IslandHB 5804, which would establish a state run retirement plan for private sector workers, was intro’d and referred to House Finance March 1.

TexasHB 3601, filed March 9, would create a state sponsored retirement plan.

UtahSB 109, passed both houses as amended and sent to the Governor March 16, would create a $500 non-refundable tax credit for small employers who offer qualified retirement plans to employees for the first time.

VermontSB 98, which would authorize the Public Retirement Study Committee to develop a proposal for a Multiple Employer Plan model, was read for the 1st time Feb. 24.

VermontHB 387, heard in Government Operations March 23, would create a Multiple Employer Plan for the self-employed and employers with less than 50 employees who don’t offer a retirement plan.  Employees would be automatically enrolled if employer participates.  A similar bill, SB 135, was reported favorable from Senate committee March 30.

Washington StateHB 1966 & SB 5675 would amend the existing Marketplace law to permit de minimus fees.  SB 5675 was heard and passed March 6.  HB 1966 passed the House March 2 and was referred to Senate Financial Institutions & Insurance March 6.

529 College Savings Plans / ABLE Plans
ArkansasHB 1762, which would allow an employer to make a matching contribution to an employee’s tax-deferred tuition savings program as an employee benefit, passed both houses and was transmitted to the Governor’s Office March 29. 

ArkansasHB 1020, which would create the General Assembly Promise Lottery Scholarship Program to provide funds to every child born in Arkansas to be used for college tuition.

California.  California enacted SB 324 (Chapter 796, Statutes of 2015) and AB 449 (Chapter 774, Statutes of 2015), which authorized the California ABLE Act Board to develop and implement the California ABLE Program Trust.  The related regulations have been adopted with immediate effect.

CaliforniaSB 218, which would authorize the transfer of all amounts in the designated beneficiary’s ABLE account upon the death to another ABLE account or the beneficiary’s estate, was heard in Governance & Finance March 29.

FloridaSB 1572, which would authorize a parent to direct a financial institution trustee of his or her child’s account to use funds for specified costs of attending specified private schools or programs, was heard in Education March 27.  

IdahoHB 41, to exempt ABLE accounts when determining an applicant’s eligibility for certain programs or grants and provide for certain assistance subject to appropriation, was enacted as Chapter 65 (not yet publicly available) on March 20.

IdahoHB 185, which would amend existing law to increase the amount that may be deducted annually for contributions to an in-state college savings program, was enacted as Chapter 84 (not yet publicly available) on March 20.

IllinoisHB 3163, which would permit ABLE account contributions to be deducted from adjusted gross income, was placed on 3rd reading March 24.  

IllinoisHB 3179 / SB 1758 would modify the term ‘qualified expenses’ for the College Savings Pool.  HB 3179 passed the House and was in to Senate Assignments March 17; SB 1758 was heard for a 2nd time March 28.

IllinoisHB 3691, to establish and fund education savings accounts to provide funds for qualified education expenses of program participants, was amended March 28 and heard in the Higher Education Committee March 30. 

IllinoisSB 2017, to create a tax credit for contributions to ABLE accounts, was heard in Revenue Committee March 29.

MaineLD 620, which would restore an income tax deduction for contributions to a qualified tuition program established under Section 529 of the Internal Revenue Code and sets the deduction at a maximum of $1,000 annually per designated beneficiary, will be heard in Taxation April 5.

MinnesotaHF 1869 / SF 1634 would allow a subtraction and establish a refundable credit for certain contributions for higher education expenses. HF 1869 was heard in Taxes March 8.  The bill is supported by Tax Chair Davids and will be included in the Omnibus Tax Bill.  SF 1634 was intro’d and referred to Taxes March 1.

MinnesotaHF 4 / SF 2255 would provide income tax subtractions for Social Security benefits and contributions to 529 college savings plans, and tax credits for contributions to any 529 college savings plans. HF 4 passed 2nd reading as amended March 28; SF 2255 was introduced and referred to Taxes March 27.

MississippiSB 2311 which would establish an ABLE program, was approved by the Governor March 20. 

MontanaHB 423, which would establish special needs education savings accounts, was tabled in Education March 24.

New JerseyS. 3070, which would provide a gross income tax credit for certain contributions to the New Jersey Better Educational Savings Trust (NJBEST) program, was intro’d and referred to Committee March 6.

New York StateS. 1160, which would establish the NYS pre-paid tuition plan in which a person may contribute to an account for the pre-payment of college tuition, tax-free, was committed to Finance March 1.

New York StateA. 6272 / S. 396 would increase the amounts of contributions that may be made tax free to family tuition accounts. A. 6272 was intro’d and referred to Ways & Means March 1; S. 396 was intro’d in January.

OhioHB 74, referred to Ways & Means Feb. 28, would increase the maximum deduction to $3K from $2K for contributions to the state’s 529 account.

Rhode IslandHB 5831 / SB 564 would provide a one-time tax credit up to $250 per dependent child for certain Rhode Island households who contribute to an account under the Rhode Island college bound tuition savings program.  HB 5831 was intro’d and referred to House Finance March 2; SB 564 was introduced and referred to Senate Finance March 15.

TexasSB 377 would make changes to the state ABLE Program, including residency changes, and would also give the board the power to enter into agreements to engage services through a consortium of states or with another entity to act as plan manager.  It was reported favorably out of Committee with amendments March 16.

UtahSB 199 is an ABLE bill that was signed by the Governor March 21.  It will authorize state administration of an ABLE plan or contracting with another state to provide ABLE program access to Utah residents, and establish a tax credit for contributions.

WisconsinAB 108, which would create a nonrefundable corporate income and franchise tax credit for certain amounts contributed by an employer into an employee’s college savings account, was read for the 1st time March 1; a fiscal estimate was received March 9.

WisconsinSB 75, which would create a nonrefundable corporate income and franchise tax credit for certain amounts contributed by an employer into an employee's college savings account, was referred to Revenue, Financial Institution & Rural Issues Feb. 21; a fiscal estimate was received March 2.


Noteworthy Facts & Figures

EBRI Surveys Retirement Confidence in 2017

For the 27th year, the Employee Benefit Research Institute EBRI executed the Retirement Confidence Survey (RCS) to determine the confidence of American workers in their ability to afford a comfortable retirement. The 2017 study found that confidence among workers remains low, however, retirees’ confidence remains high. The 2017 RCS found that six out of ten American workers feel very or somewhat confident about having enough money for a comfortable retirement, though just 18 percent feel very confident.  Survey results showed that workers who have a retirement plan, whether a defined contribution plan, defined benefit plan, or IRA, are far more likely to feel confident about having enough money for retirement.

Bank of America Merrill Lynch Analyzes Challenges and Solutions of Finances in Retirement

Bank of America Merrill Lynch published Finances in Retirement: New Challenges, New Solutions, a combination of eight studies of the transformation of retirement in America exploring experiences, values, preferences, worries, opportunities, and aspirations of Americans. The survey found that 81 percent of Americans do not know how much money they’ll need in retirement.  Merrill Lynch also acknowledged that retiree’s increasing longevity offers for a new look at retirement. Finances in Retirement: New Challenges, New Solutions indicated that there are three major forces transforming the challenge of funding retirement: 1) the massive Baby Boomer retirement wave is increasing the retiree population; 2) longevity continues to climb; and 3) the shift of the funding formula.



Senate Banking Will Host a Hearing on the Current State of Retirement Security in the U.S.

On April 5, the Committee on Banking, Housing, and Urban Affairs Subcommittee on economic policy will meet in open session to conduct a hearing entitled, “The Current State of Retirement Security in the United States.” Witnesses include: The Honorable Kent Conrad, Senior Fellow and Co-Chair of the Commission on Retirement Security and Personal Savings, Bipartisan Policy Council; and Professor Walter Russell Mead, Distinguished Fellow at Hudson Institute, Chace Professor of Foreign Affairs and Humanities, Bard College, and Editor-at-Large, The American Interest.



Calling All Volunteers: SIFMA Foundation is Looking for InvestWrite Judges

More than 5,000 industry volunteers served as judges for last year’s InvestWrite program, a national essay competition based on the acclaimed Stock Market Game. SIFMA and the SIFMA Foundation encourage you and your firms to get involved with this year’s program. Take a small step, judging takes less than two hours and is completely virtual, to make a big impact in a child’s life by supporting this financial capability program. Registration is now open; sign up today!

Last to Register: SIFMA Private Client Conference Scottsdale: April 5-6, 2017

SIFMA’s Private Client Conference convenes leaders from across the private wealth management industry to examine the most topical issues facing the business. Join us in Scottsdale, AZ for a new program focusing on financial advice amidst rapidly changing technology, regulations, and demographics.

Regional Senior Investor Protection Workshop: An Inside Look Into Real-Life Scenarios 
Join SIFMA on May 2 in Philadelphia for a morning of practical learning and information sharing among key stakeholders on how best to protect our senior investors. Unlike any other event in this space, the Regional Workshop provides attendees with the opportunity to delve deeper into the critical aspects of senior investor protection through real-life scenarios. During this hands-on session, participants will start at the beginning and walk through each step of financial exploitation and cognitive decline situations. These small-groups will determine the red flags to identify a potential situation; discuss effective internal protocols; share talking points for addressing clients; and more!

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