Washington Update

Gavel, scales of justice and law books

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.