In the News

In the article, “Midterm Election Results Could Delay SECURE 2.0,” where PLANADVISER laid out its coverage of the midterm elections and the possibility of a shift Congressional power impacting retirement legislation, namely the delay of passage of SECURE 2.0, Groom principal and co-chair of the Retirement Services practice Michael Kreps gave his thoughts on potential outcomes of SECURE 2.0.

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When discussing SECURE 2.0, Kreps said, “Republicans are going to have to decide if they’re going to do a year-end spending bill and if they want to include retirement as part of that.” He added, “It’s just not possible to predict, but it could happen that it goes next year or even the end of next year.”

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Kreps also explained that it is “really difficult to say whether any [election] scenario [on SECURE 2.0 passing] results in more or less likelihood.”

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PLANADVISER reiterated Kreps noting that “the original SECURE Act was ‘largely finished’ in 2015 but did not pass until the end of 2019.”

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“There is nothing in the House or Senate package that is an absolute deal-stopper,” he added. “A deal is possible and there is a will—the question is whether there is a will for this year.”

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To read the article, click here.

Groom’s deep dive comparison of the Securing a Strong Retirement Act (H.R. 2954, “SECURE 2.0”) and other key retirement legislation (the “EARN Act” and the “RISE & SHINE Act”) was covered by Pensions & Investments in their article, “Differences among 3 bills that will form SECURE 2.0.” The Pensions & Investments coverage focuses on the differences between the House-passed bill, Senate bills, and current law with regard to automatic enrollment and escalation, startup credit for small employers, saver’s credit, MEPs and 403(b) plans, and emergency savings.

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To read Groom’s comprehensive summary, please click here.
To read the Pensions & Investments article, click here

Groom’s comprehensive summary of the provisions in the Securing a Strong Retirement Act (H.R. 2954) was covered by PLANSPONSOR and PLANADVISER in the articles, “Where Does the Securing a Strong Retirement Act Stand?” and, “Keeping Up with the Securing a Strong Retirement Act,” respectively. In light of the different versions of retirement reform legislation currently making their way through the House and Senate, both outlets deemed Groom’s summary a “…helpful resource that details exactly what provisions are included in the different versions of the bill.” Published by Groom on August 1, 2022, the summary includes a concise chart detailing the differences between the current law, the House-passed SECURE 2.0 bill, and the Senate bills (the Enhancing American Retirement Now Act (unnumbered, the “EARN Act”) and the Retirement Improvement and Savings Enhancement to Supplement Health Improvements for the Nest Egg Act (S. 4353, the “RISE & SHINE Act”)).

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To read Groom’s summary, click here.

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.

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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.

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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.

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Click here to read the article.

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.

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“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.

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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?’”

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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.

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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.”

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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.

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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.”

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Click here to read the full article. 

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.

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To view the segment, click here.

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

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.

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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.”

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Click here to read the full article.

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.”

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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.”

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Click here to read the full article.

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.

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

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Click here to read the full article.

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