A bill introduced in the Senate May 13 featuring a slew of familiar retirement provisions is the latest in a growing list of retirement-related bills that have been introduced in both chambers of Congress this year. The Retirement Security and Savings Act of 2019 (S 1431) checks off a number of popular wish list items for defined contribution (DC) and defined benefit (DB) plans but doesn’t address open multiple employer DC plans or nondiscrimination testing relief for closed DB plans. The bill is almost identical to the version introduced late last year, and several provisions have popped up in other proposals circulated in recent years. This GRIST provides a high-level overview of the bill’s key provisions.
The bill would let sponsors of 401(k), 403(b), governmental 457(b) and SIMPLE plans match their workers’ student loan payments as if the payments were salary reduction contributions. If offered, the benefit would have to be available to all workers eligible to make salary reduction contributions matched by employer contributions, and the match rate for both programs would have to be the same. The benefit would apply only to repayments of student loan debt incurred for higher education.
The Retirement Parity for Student Loans Act, introduced in the Senate on the same day, would allow student loan matches under identical terms.
The bill aims to increase the use of automatic-enrollment designs in DC plans:
Sponsors of noncollectively bargained 401(k) plans would have to let part-time workers voluntarily contribute to the plan if they have completed at least 500 hours of service a year for two consecutive years. Employers wouldn’t be required to make nonelective contributions for these workers or match their contributions. Employers could exclude from nondiscrimination testing employees who become eligible by satisfying this requirement and wouldn’t have to provide them with top-heavy minimum benefits.
The bill would make a number of changes to the Code Section 401(a)(9) rules for required minimum distributions (RMDs):
The bill would relax the rules for qualified longevity annuity contracts (QLACs) and commercial annuities to encourage retirees to choose those income-preserving options.
Qualified Longevity Annuity Contracts
QLACs let employees use a portion of their retirement savings to purchase an annuity starting as late as age 85 without violating the RMD rules. The bill directs Treasury to amend its regulations on QLACs:
Remove Barriers for Life Annuities
The bill would remove what some retirees perceive to be barriers to purchasing commercial annuities with their savings. The following small increases in annuity payments would be allowed:
The bill would expand the self-correction program (SCP) under IRS’s Employee Plans Compliance Resolution System (EPCRS):
Although the bill is silent on closed-plan testing relief, some provisions are aimed at easing the nondiscrimination rules:
Several provisions are aimed at simplifying reporting and disclosure requirements:
Several of the bill’s provisions relate specifically to 403(b) plans:
The bill contains a few targeted provisions for DB plan sponsors:
Some provisions will be of special interest to small employers:
Other miscellaneous provisions that might be of interest to employers include: