June 2017

Coverage of legislative and regulatory developments on savings and retirement issues

The Latest

Labor Sec. Acosta and SEC Chairman Clayton State They Will Work Together on Fiduciary Rule On June 27, appearing before the Senate Appropriations Subcommittee on Labor, Health and Human Services,  Education, and Related Agencies, U.S. Secretary of Labor Alexander Acosta stated regarding the fiduciary rule “I think the SEC has important expertise and that they need to be part of the conversation. It is my hope… that the SEC will continue to work with the Department of Labor on this issue.” In a separate hearing before the Senate Appropriations Subcommittee on Financial Services and General Government, U.S. Securities and Exchange Commission (SEC) Chairman Clayton stated the SEC wants to preserve investor access to advice, products, and protection in a “coordinated way.” Clayton has also issued a request for public comment.

Supreme Court Rules Church-Affiliated Benefit Plans to Remain Exempt from ERISA On June 5 the Supreme Court ruled that church-affiliated benefit plans are church plans exempt from Employee Retirement Income Security Act (ERISA) requirements. In Advocate Health Care Network et. al. vs. Stapleton et. al., the Court reversed lower court rulings that the pension plans of three religiously-affiliated hospitals were not subject to the church plan exemption. Justice Kagan’s opinion for the 8-0 decision states “Under the statute, certain plans for the employees of churches or church-affiliated nonprofits count as “church plans” even though not actually administered by a church. See §1002(33)(C)(i). The question presented here is whether a church must have originally established such a plan for it to so qualify. ERISA, we hold, does not impose that requirement.”



Bills Introduced in House and Senate on DOL Fiduciary On June 8 Rep. Phil Roe (R-Tenn.) and Rep. Peter Roskam (R-Ill.) introduced H.R. 2823, the Affordable Retirement Advice for Savers Act. The bill would overturn the U.S. Department of Labor (DOL) fiduciary rule while requiring financial advisors to act in their clients’ best interest. The bill would also implement disclosure requirements to improve transparency. Sen. Johnny Isakson (R-Ga.) introduced corresponding legislation, S. 1321, the Affordable Retirement Advice Protection Act, which outlines a best interest standard as an alternative to the DOL fiduciary rule.

House Passes Financial CHOICE Act On June 8 the House passed the Financial CHOICE Act 233-186 along party lines. The CHOICE Act repeals the Department of Labor Fiduciary Rule and sections and titles of the Dodd-Frank Act, including the Volcker Rule, that “limit or inhibit capital formation.”  The CHOICE Act also amends the Consumer Financial Protection Act of 2010 to eliminate the CFPB’s supervisory role over financial institutions and bring it under the congressional appropriations process, among other changes.

Bipartisan Bill Introduced Aimed at Helping Graduate Students Save On June 19 Sens. Elizabeth Warren (D-Mass.), Mike Lee (R-Utah), Ron Wyden (D-Ore.), and Tim Scott (R-S.C.) introduced the Graduate Student Savings Act of 2017. The bill permits graduate students to set aside earnings from grants and fellowships in tax-deferred individual retirement accounts (IRAs). The bill alters the tax code to let such earnings qualify as compensation for the purpose of retirement saving.

Bipartisan Retirement Security Act Introduced Sen. Susan Collins (R-Maine) and Sen. Bill Nelson (D-Fla.) on June 20 introduced the Retirement Security Act, bipartisan legislation intended to encourage retirement savings by assisting small businesses to offer retirement plans to employees. The bill allows more business to join multiple employer plans (MEPs), protects members of a MEP from losing tax benefits if one fails to meet the criteria, and lessens costs through a “saver’s credit” and simplification and consolidation of required notices.



Certified Financial Planner Board Proposes Revisions to Standards of Conduct A draft Code of Ethics and Standards of Conduct from the Certified Financial Planner (CFP) Board of Standards would subject CFPs to the fiduciary standard. The Certified Financial Planner Board of Standards Inc. recently released a new 17-page code of ethics and standards of conduct which altered the definition of fiduciary, compensation and financial planning.  Among other things, the CFP board will make compensation definitions more specific to make clear that CFPs can define their practice as “fee-only” even if they have an affiliation that charges commission, only if the affiliation does not directly affect the fee-only clients. Comments are requested by August 21, 2017.

Treasury Releases Regulatory Reform Report In response to President Trump’s Executive Order on Core Principles for regulating the U.S. financial system, Treasury released its first report outlining proposed changes to the regulatory framework, including revisions to Dodd-Frank and the Consumer Protection Act.


State Issues

State Run Retirement Savings Plans
NevadaAB 430, which would create a task force to study the retirement security of Nevadans and consider the creation of a retirement savings plan for private sector workers, was amended and reported out of Committee May 23.  No further action was taken prior to adjournment so the bill is dead.

New York State – The NYS Secure Choice Savings Program Act (S. 4344-B & A. 4982-B) did not pass either house of the Legislature prior to adjournment June 21.  There were strong grassroots efforts supporting the bill and widespread industry opposition; it was held in the Assembly Rules Committee and remained in the Senate Committee on Retirement and Social Security Law.

North Carolina H. 633 , “secure choice”-styled legislation without an employer mandate or reference to the DOL safe harbor rule, was referred to the Pensions & Retirement Committee April 10.  SIFMA submitted comments.

Oregon – The Oregon Retirement Savings Program filed a temporary amendment to its Program rules with the Oregon Secretary of State’s office. This temporary amendment is effective June 22; the Rules Coordinator will solicit comments on this and other amendments to the Oregon Retirement Savings Program rules during the permanent rulemaking process in the second half of 2017.

VermontSB 135, which would, among other things, adopt and implement a voluntary Multiple Employer Plan (MEP) as recommended by Vermont’s multi-year study, was signed by the Governor June 8.

WisconsinAB 403, which would create a Wisconsin Private Retirement Security Board and establish a private retirement security plan to provide retirement benefits for residents of this state, was referred to State Affairs June 21. 

529 College Savings Plans

CaliforniaSB 218 , which would authorize ABLE account transfers upon the death of the designated beneficiary, passed the Senate and has a hearing in Assembly Revenue & Taxation July 10.

DelawareHB 148, which would allow a DE resident a deduction from taxable income of up to $2,500 for contributions to any 529 College Savings Plan or ABLE Account, was assigned to Appropriations June 27.

FloridaSB 896 , approved by the Governor June 9 as Ch. 76, will revise the financial disclosures required to be filed by certain Florida Prepaid College Board members and extend the repeal date of the direct-support organization for the Florida Prepaid College Board.

IllinoisHB 3179 / SB 1758 would modify the term ‘qualified expenses’ for the College Savings Pool to add computer equipment and certain special needs services.  HB 3179 was sent to the Governor June 23.

MassachusettsSB 1667 , which would allow a deduction for contributions to any qualified tuition programs of up to $500 per single/$1K joint, will be heard in committee on July 11. 

MassachusettsSB 682, which would require the MA Education Financing Authority to create a college savings account for each eligible child born and issued a birth certificate in the commonwealth, will be heard in the Joint Committee on Higher Education July 13.

MassachusettsHB 2225, which would create a college savings account for each eligible child born and issued a birth certificate in the commonwealth, will be heard in the Joint Committee on Higher Education July 13.

Michigan HCR 8 , a resolution calling on Congress to include transportation costs as a qualified education expense under §529, was referred to Education June 7.

Minnesota – The Omnibus Tax bill HF 1-A was signed by the Gov. May 30 and includes an income tax benefit for contributions made to any qualified 529 plan (up to $1.5K single/$3K joint), in Sec. 15 of Art. 1.  The law is effective for the 2017 tax year.

Ohio SB 5 , which would increase the deduction ceiling for contributions to OH 529 plans from $2K to $10K, passed the Senate June 15 and was introduced to the House June 20.   

OregonSB 1027 , to prohibit Dept. of Human Services and Health Authority payment claims on ABLE accounts, was signed by the Governor June 14 as Ch. 367.

Pennsylvania HB 1385 , which would repeal the PA 529 tax parity law and limit state tax benefits to only the state plan, was head in committee and re-committed to Rules June 20.    

Washington StateSB 5923, to permit eligible purchasers to redeem units under the Advanced College Tuition Payment Program at the unit cash value price if all the redeemed funds are deposited immediately into an eligible WA College Savings Plan, was heard in Higher Education June 27.


Noteworthy Facts & Figures

More Retirement Plans Using Roth Accounts According to Survey A recent T. Rowe Price report found that the number of plan sponsors offering a Roth contribution option increased ten percent in 2016, bringing the total to 60.9 percent of plans.  The report also found that in 2016, 33 percent of plans offer a six percent default deferral rate or more for auto-enrollments.



DOL RFI on Fiduciary Rule Expected The DOL is expected to release its “Request for Information” regarding the fiduciary rule soon. The proposal is currently under review at the Office of Information and Regulatory Affairs (OIRA).




Join Us in Denver for an Inside Look into Real-Life Senior Investor Protection Scenarios 
Join SIFMA, on July 27, for a morning of practical learning and information sharing among key stakeholders on promising practices 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 affecting senior investors 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 cover the red flags to identify a potential situation; discuss effective internal protocols; share talking points for addressing clients; and more!

Register Today for SIFMA's Senior Investor Protection Seminar on FINRA Rules 2165 and 4512
Join SIFMA on September 13 for a half-day event as the industry prepares for the impending implementation of FINRA’s new Senior Investor Protection Rules. Industry experts and regulators will gather to take a deep dive into rules 2165 and 4512, which will provide firms with a safe harbor for temporarily holding suspect disbursements and require firms to attempt to collect trusted contact information from all their clients. With the February implementation deadline fast approaching, participants will have the opportunity to analyze the new rules and discuss the various implementation strategies for firms of all sizes and business models

Mark Your Calendar for SIFMA’s Annual Meeting: Oct. 23-24 in Washington

The Capital Markets Conference returns to our nation’s capital on October 23-24 for candid one-on-one conversations and even more in-depth breakout sessions on the state of America’s capital markets. Join us for expert insights and unparalleled networking with the nation’s foremost policymakers, regulators and financial market experts. Early bird pricing is now available. SIFMA’s Annual Meeting: Where the capital markets meet.

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