While Capitol Hill is customarily very active when addressing pension and retirement savings reform, they have been remarkably quiet since the passing of the Tax Cuts & Jobs Act at the end of last year. Several changes were on the table, primarily “Rothification” which could have resulted in retirement savings plans being changed to only offering post-tax deferral options. However, the final regulations made minimal impact to defined contribution plans, with a small change to plan loan repayment requirements.
A quiet Capitol Hill doesn’t mean these ideas have gone away. NAGDCA and other lobbying groups continue actively working to protect these plans for all participants. Among their priorities are:
- Preserve and protect current plan features, including offering both pre- and post-tax savings opportunities; the ability to withdraw funds prior to age 59½ without an early withdrawal penalty; and retaining special catch-up provisions allowing participants close to retirement to enhance their retirement savings.
- Extending qualifying charitable distributions to all plans, not only Roth IRAs.
- Build Roth esponsiveness to allow participants to roll Roth IRA assets into all retirement savings plans; exempt plan-designated Roth contributions from required minimum distributions – to align with Roth IRA rules; and to allow plan-designated Roth contributions to be used for the purchase of service credits in 401(a) retirement plans.
- Improve administrative efficiency by eliminating the “first day of the month” rule, and by allowing non-spousal beneficiaries to roll assets into retirement savings plans.