On Thursday, May 23, 2019, the U.S. House of Representatives passed, by a huge 417 to 3 margin, the Setting Every Community Up for Retirement Enhancement Act (the โSECURE Actโ). Although the current climate in Washington is unpredictable at best and because the SECURE Act enjoys wide bipartisan support, pundits forecast that the proposal stands a good chance of passing the Senate in some form before the end of this yearโs legislative session. If passed, it is considered likely that President Trump will sign the legislation. Should the proposed legislation become law, it could represent the most significant pension legislation since the Pension Protection Act of 2006.
In its current form, the SECURE Act is an amalgamation of a number of pension-related proposals that have been offered on and off during the course of the past several years. In fact, the Senate presently has a similar bill before it that was introduced last year, entitled the Retirement Enhancement Securities Act (โRESAโ). Many of RESAโs provisions could eventually make their way into the SECURE Act, and, of course, the SECURE Act might also be significantly modified through committee or other Congressional action before being finalized.
At present, as passed by the House, the SECURE Act contains the following major provisions that apply directly to 401(k) plans:
OBSERVATION: Although the SECURE Act provision seeks to expand the use of annuities in 401(k) plans, with the stated goal of providing increased retirement income security to retirees, critics charge that the provision could encourage insurance companies to sell annuity products to plans that may be overly complicated, not adequately communicated, or simply inappropriate for the planโs general demographic.
In addition to the above, there are a number of other proposed provisions, not all of which directly impact 401(k) plans.
Comments:
When it comes to prognostications about the chances of legislation being enacted in any particular form in todayโs Washington, nobody claims to have a crystal ball. Further, pensions are not exactly the hottest topic in the news today, even though intense lobbying continues unabated. As always, we will be carefully monitoring the situation and will keep you posted accordingly. Remember, specific questions about new or existing law concerning 401(k) plans should be directed to your ERISA counsel or other professional benefits advisors.
The information and content contained in this blog post are for general informational purposes only, and does not, and is not intended to, constitute legal advice.