In the News

Michael Kreps Comments on SECURE 2.0 in Pensions & Investments

January 10, 2022

Principal Michael Kreps provided commentary to Pensions & Investments on the challenges facing the passage of a SECURE 2.0 package. SECURE 2.0, or the Securing a Strong Retirement Act, would enact retirement reform similar to 2019’s Setting Every Community Up for Retirement Enhancement (“SECURE”) Act.

A SECURE 2.0 bill is unlikely to get floor time in the Senate and passing it through unanimous consent — a fast-tracked process where no senator objects — is difficult, said Kreps.

If a SECURE 2.0 bill were to pass, members in the House and Senate would likely work out some sort of compromise through an informal process and then attach the bill to a piece of must-pass legislation or a larger bill that’s moving through Congress, Kreps said. The original SECURE Act was attached to a year-end spending bill in 2019.

Click here to read the article.

J. Rose Zaklad Discusses SECURE Act Retirement Amendments In Tax Notes

October 1, 2020

In the article, “IRS Says Wait and See on SECURE Act IRA Model Amendments,” Tax Notes summarized principal J. Rose (“Rosie”) Zaklad’s discussion during the American Bar Association Section of Taxation’s virtual meeting where she addressed challenges facing prospective retirement plan amendments to the Setting Every Community Up for Retirement Enhancement (“SECURE”) Act.

“The rules were already very complicated, and they’re even more complicated now” Rosie stated. There are also serious consequences for failing to comply with the new required minimum distribution (“RMD”) rules, like a 50 percent excise tax on the taxpayer, and reporting and withholding penalties for the plan sponsors and service providers, she noted.

The SECURE Act’s RMD changes have already taken effect for deaths occurring after December 31, 2019, and many plan sponsors are restating their plans, Rosie continued. “They’re saying, ‘Hey, I want to add my SECURE Act amendments, can you just throw them in there?’”

Making the change to reflect the minimum age for RMDs is straightforward, but for everything else, practitioners would really like to have a model plan amendment to rely on, she said to the panel.

Rosie added, “What we don’t want to do is put something in the plan and then have to change it later. Sometimes you have to go through different approvals to get those changes in, and it just looks bad if we’re amending a bunch of times.”

The IRS should wait until after it issues regulations to provide a model amendment to avoid any delays in the process. And if practitioners know that a model amendment is coming, they can relay that to plan providers and tell them to hold off on making amendments to the more complicated provisions.

The good news, according to Rosie, is that although the RMD rule changes are already in effect, if an individual dies now, “presumably there’s 10 more years with which to make a distribution. So hopefully, we won’t be making a mistake between now and when the 10-year period is up.”

Click here to read the full article. 

March 11, 2020

Principal David Levine joined S&P Dow Jones Indices to share a few takeaways on the Setting Every Community Up for Retirement Enhancement Act of 2019 (“SECURE Act”) lifetime income provisions. In particular, the new lifetime income disclosure rule and a new safe harbor option for sponsors.

To view the segment, click here.

To learn more about the SECURE Act lifetime income provisions, see our previous publication linked here.

Michael Kreps Discusses In-Plan Retirement Income Options with Pensions & Investments

January 13, 2020

In the Pensions & Investments article, “No one rushing to add annuity income option,” principal Michael Kreps weighed in on whether plan sponsors will now move to offer in-plan retirement income options given the safe harbor provisions provided in the recently passed SECURE Act.

Taking into account conversations with fiduciaries for large plans recently, Kreps commented that “[s]ome will dip their toes into this.” Even if plans decide to act, it can take a year or more to complete a plan-design change, suggesting that 2021 may be a target for some employers to incorporate the in-plan lifetime income options, he said.  He added that despite the safe harbor, sponsors may continue to have general concerns about litigation. “Litigation risk makes everyone a little gun-shy,” he said. When contemplating adding an in-plan retirement income option, “sponsors have to be comfortable in justifying the product and the fees,” he said. “The benefits to participants must be justified by the costs.”

Click here to read the full article.

Brigen Winters Discusses the SECURE Act

with Pensions & Investments

December 23, 2019

Groom principal Brigen Winters weighed in on the Setting Every Community up for Retirement Enhancement Act of 2019, referred to as the SECURE Act, and its impact on small employers in the Pensions & Investments article titled “SECURE Act moves to reality from long shot.”

Winters noted that “…the open MEP provision will provide more opportunities to small employers who do not have the bandwidth and benefits knowledge needed to offer a retirement plan of their own.”

Click here to read the full article.

David Levine Speaks with CNBC About the SECURE Act and Related Distribution Rules

December 17, 2019

Groom principal David Levine was featured in the CNBC article “Lawmakers are killing this popular retirement tax break for the wealthy.” He commented on the recently passed SECURE Act provision that reduces the window for beneficiaries of individual retirement accounts and certain retirement plans to take distribution, particularly affecting individuals leaving large inheritances in these retirement accounts. Termed the “stretch IRA,” this prevalent tactic has traditionally allowed beneficiaries to take distributions from such retirement accounts over an undefined time period. After December 31, 2019, the SECURE Act provides specific time periods under which beneficiaries must have all money withdrawn from these accounts.

“In some cases it may be better to die on Dec. 31, 2019 than Jan. 1, 2020,” said Levine.

Click here to read the full article.