Savings Enhancement by Alleviating Leakage in 401(k) Savings Act

SIFMA and 13 other associations submit comment to the U.S. Congress encouraging Members to support the Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011 (H.R.3287, the SEAL Act).  The SEAL Act, makes a constructive step in the 401(k) plan loan system by providing flexibility to loan repayment and hardship withdrawal rules regarding 401(k) plans. Every year, workers can lose valuable retirement savings when they lose a job or change jobs if they have an outstanding 401(k) plan loan. In addition, under current law their participation in a 401(k) plan will be interrupted if they take a “hardship distribution” from their plan to cover a personal emergency. This bill would reduce leakage from 401(k) plans by allowing workers who, through loss of a job, a job change or for any other reason, have terminated their employment and have an outstanding loan from their 401(k) plan to have an extended period of time to roll over the unpaid balance to another savings vehicle.