It’s an “exciting time to be an ERISA attorney,” Pam O’Rourke, senior vice president and senior counsel for Integrated Retirement Initiatives, told attendees at the TD Ameritrade National LINC conference during her session on Thursday. She discussed some of the major legislative and regulatory changes that have been introduced and how they will affect retirement plans.
The Bipartisan Budget Act of 2015, which was passed in late October, increased federal spending and raised the debt ceiling. Some of the changes made to pay for that, O’Rourke said, affect retirement planning, including Social Security.
The bill closed loopholes that a lot of people had “baked into their retirement income projections,” including the popular file and suspend strategy.
The Consolidated Appropriations Act of 2016 made permanent the ability for investors 701/2 or older to make charitable contributions directly from their IRAs, and made it possible for investors to make rollovers to SIMPLE IRAs from different types of accounts if they’ve been eligible for at least two years.
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“The average tenure of a worker today is about 4.6 years, so they’re building assets in all types of employer plans,” she said. “The rules continually allow more free movement to consolidate” those assets.
In late January, the White House released a fact sheet describing some of its initiatives to improve retirement savings, O’Rourke said, including efforts to increase access to savings for the approximately 68 million people who don’t have access through an employer; automatic mandatory IRAs for small businesses that don’t offer other plans, which O’Rourke said has been included in “budget initiatives for the last several years”; and increased access to multiple employer plans.
Association MEPs are currently allowed for groups of employers that are related. O’Rourke said the industry tried to create multiple employer plans several years ago, but the Department of Labor issued guidance a few years ago that made open MEPs unattractive. “It looks like now they might be dialing that back,” she said.
“It’s an election year so we know we’re probably not going to see any major legislation,” she added, “but I think what we’re going to see is the Department of Labor and IRS trying to do what they can from a regulatory standpoint, similar to what they’re trying to do with the conflict of interest regulations in order to move these initiatives forward as much as they can without formal legislation.”
Speaking of the conflict of interest rule, which finally made it to the Office of Management and Budget on Jan. 29, O’Rourke said, “nothing that I have seen in my years as an ERISA attorney has generated the level of debate and discussion that I’ve seen with these regulations.”