Tag: Washington

What Retirement Plan Sponsors Need to Know About CARES Act

The CARES Act (Coronavirus Aid, Relief and Economic Security Act) was signed into law on March 27, 2020. The CARES Act is designed to provide support to Qualified Individuals who are experiencing financial consequence as a result of COVID-19. Qualified Individuals include those quarantined, laid off or subject to reduced hours or those unable to work due to lack of child-care as a result of COVID-19. Please find below a summary of the CARES Act provisions specific to Retirement Plans.

Just because these options are available does not ensure they are financially advantageous. Please consider not only your short-term needs but also your long-term Values & Goals, as well as alternate options, before proceeding. A consultation can help ensure your financial actions are aligned with your Values & Goals.

Retirement Plan Distributions to Qualified Individuals

  • Permits in-service hardship distributions up to $100,000 during the period January 1, 2020 – December 31, 2020.
  • Waives the 10% early distribution penalty
  • Taxable, however, 20% federal income tax withholding can be ignored
  • Distribution can be repaid to the plan within 3 years to gain tax-free rollover treatment
  • Can recognize the distribution as taxable income spread over 3 years, effectively spreading federal tax obligations out over 3 years (state tax TBD).

Relaxed Retirement Plan Loan Rules for Qualified Individuals

  • Permits Plan loans up to the lesser of 100% of the participants vested balance or $100,000
  • Individuals with outstanding loans with a repayment due from the date of enactment of CARES through December 31, 2020 may delay loan repayments for up to one year.

Required Minimum Distributions Temporarily Waived

  • Option to waive RMDs for the year 2020.

Most recordkeepers are providing a global amendment to retirement plans, making these options available as soon as administratively feasible, unless the Plan Sponsor elects not to include these options. Plan amendments for these provisions are not required until the last day of the first plan year beginning on or after January 1, 2022 (January 1, 2024 for governmental plans).


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This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Securities offered through LPL Financial, Member FINRA/SIPC. Investment advisory services are offered through Global Retirement Partners, an SEC Registered Investment Advisor. Global Retirement Partners and Strategic Retirement Partners (SRP) are separate entities from LPL Financial.

Global Retirement Partners employs (or contracts with) individuals who may be (1) registered representatives of LPL Financial and investment adviser representatives of Global Retirement Partners; or (2) solely investment adviser representatives of Global Retirement Partners. Although all personnel operate their businesses under the name Strategic Retirement Partners (SRP), they are each possibly subject to differing obligations and limitations and may be able to provide differing products or services.

What you need to know from the NAPA Fly-In

NAPA’s D.C. Fly-In Forum, was held in July. In its seventh year, the Fly-In is a unique experience for retirement plan focused advisors who are looking to have an impact and engage with key federal policy makers as you advocate for legislative and regulatory policy that affects America’s retirement. Again this year, a number of SRP’s Managing Directors were in attendance.

Here are a few key take-aways from the sessions:

  • State and Local Retirement Policy Update: States like Nevada, New Jersey, and Massachusetts are stepping in to create fiduciary rules, since the DOL rule was vacated.
  • Retirement Plan Lawsuits in 2019: Discussion on the current wave of litigation, such as SDBA, higher education plans, stable value, and rollovers.
  • Tackling the Gig Economy: How to provide benefit coverage for the growing group of those engaged in non-traditional work and the challenges that these benefits may pose for employers.
  • Working with Your Clients and Student Loans: In an era where student loan assistance is one of the most asked about benefits for new employees, this session covered the innovative ideas to help those struggling with student loan and other consumer debt coming from employers, the industry, and Washington, DC.
  • Regulatory Roster: A regulatory agenda update from the DOL covering a wide range of topics such as modernizing participant communications, lifetime income options, missing participants, a forthcoming new proposed fiduciary rule, and plan audits.
  • A Federal Solution to Retirement Access with Rep. Richie Neal (D-MA), Chairman of the House Ways & Means Committee: Rep. Neal shared information on the SECURE act’s progress through capitol hill and how it is proposed to impact retirement savings.

For more information about any of these topics, please contact your SRP Managing Director.

Washington Update

A number of bills are moving rapidly through the House and the Senate that would (if passed and signed) enhance the retirement plans of many Americans. While these bills continue to morph, below is a general description of provisions as of early April 2019.

Retirement Security & Savings Act
Senators Rob Portman (R-Ohio) and Ben Cardin (D-Maryland) introduced the Retirement Security & Savings Act in December 2018 and have reintroduced it in 2019. The Act is considered to be as sweeping as prior legislation, specifically the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, and Pension Protection Act (PPA) of 2006. Proposals that would impact governmental plans include:

  • Eliminate the 457(b) “first day of the month” rule
  • Permit 457(b) plans to allow in-service distributions at age 59½ rather than 70½
  • Eliminate the Required Minimum Distributions (RMD) from Roth 457(b)
  • Allow rollovers from Roth IRAs to Roth 457 plans
  • Allowing non-spousal beneficiaries to roll assets into their employer-based plans\
  • Updating the mortality tables used when calculating RMD at age 70½
  • Exempting small accounts (less than $100,000) from the RMD calculation
  • Creating an additional catch-up option for participants over age 60
  • Simplifying auto-enrollment participant notices
  • Allowing employer matching to retirement plans for student loan payments

Retirement Enhancement and Savings Act
Representatives Ron Kind (D-WI) and Mike Kelly (R-PA) introduced the Retirement Enhancement and Savings Act (RESA) in February. While RESA is primarily aimed at private sector plans, it does include a provision that would allow more time for terminating participants to repay outstanding plan loans.

Secure Act
The Setting Every Community Up for Retirement Enhancement Act of 2019 sponsored by Richard Neal (D-MA) and Kevin Brady (R-TX) has passed unanimously out of the House Ways and Means Committee as of early April and will go to the full House. This bill includes the core provisions of RESA making smaller employers able to join multiple employer plans and includes a safe harbor for selecting lifetime income providers in defined contribution plans. The latest provision of Lifetime Income Disclosure Act (LIDA) has been challenged by plan sponsors as being inflexible. More on both RESA and Secure Act as they move through the House and Senate, but they appear to be supported by both parties and will likely go to Conference Committee and head to the White House.

NAGDCA Legislative Priorities
Each spring, the NAGDCA Executive Board visits congressional representatives in Washington DC to advocate for governmental retirement savings plans and participants. In addition to some of the above proposals, the Board is advocating for:

  • Eliminating the “First Day of the Month” rule for 457(b) plans
  • Allowing participants to roll Roth IRAs into their plan accounts
  • Exempting Roth contributions from the RMD calculation
  • Preserving important unique plan features, including allowing both pre-tax and Roth options; maintaining the 10% early withdrawal penalty exclusion in 457(b) plans; and maintaining both traditional and over-50 catch-up provisions.

Please consult with your SRP Managing Director for more information on the status of pension proposals and how they may affect your plan.