May 2017

Coverage of legislative and regulatory developments on savings and retirement issues

The Latest

DOL Moves Forward with Fiduciary Rule, Effective June 9
On May 22, the U.S. Department of Labor’s (DOL) Secretary Alexander Acosta wrote an opinion in the Wall Street Journal stating that “the Labor Department has concluded that it is necessary to seek additional public input on the entire Fiduciary Rule, and we will do so. We recognize that the rule goes into partial effect on June 9, with full implementation on Jan. 1, 2018…and have found no principled legal basis to change the June 9 date while we seek public input.” The DOL also released a set of FAQs and a Temporary Enforcement Policy. SIFMA’s President and CEO Kenneth E. Bentsen, Jr. in a statement said, "We hope that upon the department's completion of its wholesale rule review, they will conclude, as we believe the evidence clearly shows, that dramatic and fundamental changes are appropriate and necessary."

President Signs Resolutions on State-Run Retirement Plans
On May 17, President Donald Trump signed into law H.J. Res 66, a joint resolution disapproving the rule submitted by DOL relating to savings arrangements established by States for non-governmental employees. He also signed into law H.J. Res 67, a joint resolution disapproving the rule submitted by the DOL relating to savings arrangements established by qualified State political subdivisions for non-governmental employees. SIFMA commended the Senate for passing the resolutions on May 3, stating that they ensure “retirement savers have the same high-level protections and options available to workers under private plans.” In spite of the Federal CRA passage, some states have vowed to move forward, including CA, IL, CT, MD, and OR.



House Education and Workforce Subcommittee Holds a Hearing on Regulatory Barriers to Retirement
On May 18, the House Education and Workforce Subcommittee on Health, Employment, Labor and Pensions (HELP) held a hearing on “Regulatory Barriers Facing Workers and Families Saving for Retirement.” Subcommittee Chairman Tim Walberg (R-Mich.) highlighted the passage of his Congressional Review Act resolution disapproving of the DOL’s safe harbor for state and municipality run retirement plans for private sector workers, which ensures that the same investor protection rules apply to all retirement plans. There was bipartisan support expressed for permitting open multiple employer plans (MEPs) and electronic disclosure of retirement plan-related documents. Read More

HFSC Sends CHOICE Act to House Floor, Instructs SEC to Move First on Fiduciary Rule
On May 4, the House Financial Services Committee concluded their markup of H.R. 10, the Financial CHOICE Act of 2017. While none of the Democratic amendments offered were agreed to, the manager’s amendment offered by Chairman Jeb Hensarling (R-Texas) passed in a voice vote, and the bill was favorably reported to the House in a 34-26 party line vote. The legislation includes a section that instructs the Securities and Exchange Commission (SEC) to move first on the creation of the fiduciary rule, rather than DOL. There were numerous Democratic amendments offered, to include several related to the Consumer Financial Protection Bureau (CFPB), as well as striking the section on the fiduciary rule, auditing the Federal Reserve, and the Volcker Rule. Read More

Republican Senators Request Review of Fiduciary Rule
On April 28, Sens. Lamar Alexander (R-Tenn.), Michael Enzi (R-Wyo.), Richard Burr (R-N.C.), Johnny Isakson (R-Ga.), Susan Collins (R-Mass.), Bill Cassidy (R-La.), Todd Young (R-Ind.), Pat Roberts (R-Kan.), and Tim Scott (R-S.C.) from the Senate HELP Committee wrote a letter to Acosta asking him to “conduct and finalize an exhaustive review” of the fiduciary rule before it becomes applicable. It also cited the February 3 Presidential memorandum that directs the Secretary to examine the rule.



DOL Requests Information to Collect Data for Household Surveys
On April 27, DOL’s EBSA submitted an information collection request proposal titled “On the Road to Retirement Surveys” to the Office of Management and Budget (OMB) for review and approval for use. The surveys would investigate household retirement planning and decision-making. SIFMA sent a letter of support to the DOL in April 2016 during the proposed information collection request, and urged them to take into account the following suggestions: 1) Ensure a representative sampling; 2) Remove unintended but implicit bias about savings; 3) Consider the intensity of individual and household retirement planning; 4) Explore underlying obstacles to retirement saving and investing; and 5) Provide more granularity in the 56+ age category. 


State Issues

State Run Retirement Savings Plans
Colorado.  The Colorado legislature adjourned on May 10.  HB 1290, a mandatory-on-employer auto-IRA plan, which passed the House but was postponed indefinitely in Senate Committee on April 26, is now officially dead.  SIFMA submitted a letter of opposition. 

Hawaii.  The Hawaii legislature has adjourned for the year.  Bills carry over to next year; resolutions do not.  HCR 38 / SCR 16 , which would have convened a legislative working group to investigate and identify strategies to promote greater retirement savings for private sector employees, are therefore dead.  SCR 16 had passed the Senate.  HCR 38 did not make it out of House Committee.

New Jersey A. 4853, which would establish a "Garden State MEP," without references to the DOL safe harbor rule, no employer mandate, and is open to individuals, was introduced May 18.   

North Carolina H. 633, which differs from the typical “secure choice” bills in that it does not have an employer mandate or references to the DOL safe harbor rule.  This bill was referred to the Pensions and Retirement Committee on April 10.  SIFMA submitted comments.

VermontSB 135 , which would, among other things, adopt and implement a voluntary Multiple Employer Plan (MEP), passed both houses on May 18 after being conferenced.  

TennesseeSB 948 / HB 1194, the Voluntary Employee Retirement Accounts Program Act with bipartisan sponsorship, did not move this year but will carry over to next year. 

TexasHB 3601 , left pending in Pensions April 24, would create a state-administered auto-IRA savings program and a state-sponsored multiple employer plan.

529 College Savings Plans
CaliforniaAB 34 & SB 1175 would provide for a $100 deposit into certain California 529 accounts owned by state residents.  AB 34 was placed on suspense file May 10.  SB 1175 was amended twice and referred to a second committee. ACR 57, which would designate May 29, 2017, as 529 College Savings Day, to raise awareness about the importance of saving for college with the help of 529 college savings plans, passed the Assembly May 22.

FloridaSB 896 , which would revise the financial disclosures required to be filed by certain Florida Prepaid College Board members, passed both houses May 3. SB 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, died May 5.   

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 read for a 3rd time May 18; SB 1758 passed the Senate April 27 and was referred to House Rules. HB 3691, to establish and fund education savings accounts to provide funds for qualified education expenses of program participants, passed the House and was amended in Senate Higher Education May 16.  

MaineLD 620 which would have restored an income tax deduction for contributions to a qualified tuition program and set the deduction at a maximum of $1,000 annually per designated beneficiary, died May 11.

Minnesota.  The Omnibus Tax Conference Comm. final bill ( HF 4 / SF 2255), was vetoed by the Governor on May 15.  Negotiations between the Governor and Legislature produced an amended tax bill, which includes the 529 tax parity provision, to be considered during the recently called special session (regular session ended May 22). 

NevadaSB 76 , which would expand the list of authorized investments for certain public entities, including the NV Higher Education Prepaid Tuition Trust Fund, passed the Senate but failed to make the Assembly deadline. SB 242 , which would permit the Board to delegate to the State Treasurer the powers and duties necessary to administer the NV Higher Education Prepaid Tuition Program and permit unused credits to be applied to graduate-level studies, passed the Senate but failed to make the Assembly deadline.

New JerseyA. 217 / S. 832 would allow a gross income tax deduction for amounts contributed to the New Jersey Better Educational Savings Trust (NJBEST) Program for taxpayers with gross incomes under $500,000.  S. 832 was referred to Budget & Appropriations May 18. 

New York StateA. 7450 , which would increase the contribution that a resident taxpayer may make to family tuition accounts for each beneficiary during a taxable year, was referred to Ways & Means April 26.

TexasSB 3 , as amended, which would create Education Savings Account (ESA) and Tax Credit Scholarship (TCS) programs, passed the Senate as amended and was referred to House Public Education May 12.

WisconsinSB 75 / AB 108 would create a nonrefundable corporate income and franchise tax credit for certain amounts contributed by an employer into an employee’s college savings account.  SB 75 was heard in Revenue, Financial Institutions and Rural Issues May 24.  AB 108 had a public hearing May 9. 

ABLE Accounts
California. SB 218, which would authorize the transfer of all amounts in the designated beneficiary’s ABLE account to an ABLE account for another individual specified by either the designated beneficiary or the estate of the designated beneficiary upon the death of the designated beneficiary, will be heard in Appropriations May 25. 

IllinoisSB 2017, to create a tax credit for contributions to ABLE accounts, was re-referred to Assignments May 5 (died).  A similar bill, HB 3163 passed the House and was re-referred to Senate Assignments May 19. 

OregonSB 1027 , which would prohibit the Department of Human Services and Oregon Health Authority from seeking payment from amounts in ABLE accounts.  The bill passed the Senate and was heard in House Human Services & Housing May 18.

TexasSB 1764 , which would provide that a guardian of an estate may be terminated if the assets are placed in an ABLE account with the ward as beneficiary, was placed on the Local, Consent & Res. Calendar May 24.   SB 377 would make changes to the state ABLE Program, including residency changes, and would 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.  The bill passed both houses May 21.


Noteworthy Facts & Figures

Post-Millenial Generation Already Saving for Retirement
According to a national study by The Center for Generational Kinetics titled “The State of Gen Z 2017: Meet the Throwback Generation,” 12 percent of Generation Z (those aged between 14-21) are already saving for retirement, and 21 percent had a savings account before turning 10. The study also found that 56 percent of those studied have discussed saving money with their parents during the last six months.

Retirement Accounts Cited More as Major Source of Income in Retirement
According to a Gallup poll, 50 percent of non-retired Americans anticipate their retirement savings accounts to be a major source of income during retirement, which is the highest amount since Gallup’s April 2008 poll. Additionally, 25 percent of those polled cite regular savings accounts or certificates of deposit as their major potential income source.



ERISA Advisory Council to Meet on June 6-8
There will be a meeting of the Employee Retirement Income Security Act (ERISA) Advisory Council June 6-8 at the DOL. The meeting will run from 9am to 5:30pm on June 6-7, and from 9am-12pm on June 8. The Advisory Council will discuss the following topics: 1) Reducing the burden and increasing the effectiveness of mandated disclosures regarding employment-based health benefit plans in the private sector; and 2) Mandated disclosure for retirement plans and enhancing effectiveness for participants and sponsors.



C&L Boston Regional Seminar 2017
June 07, 2017 | Boston, MA 

C&L St. Louis Regional Seminar 2017
June 20, 2017 | St. Louis, MO

Senior Investor Protection Denver Regional Workshop
July 27, 2017 | Denver, CO

120 Broadway, 35th Floor, New York, NY 10271 | 212.313.1000

1101 New York Avenue, NW, 8th Floor, Washington, DC 20005 | 202.962.7300

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