A Retirement Proposal GOP and Democrats May Agree On
The House of Representatives will take on a blue hue in January 2019, following the results of the November midterm elections, and when the 116th Congress is gaveled into session, Democrats will assume leadership on committees of relevance to retirement issues.

Of particular interest is the likelihood of Rep. Richard Neal (D-Mass.) becoming Chair of the House Ways and Means Committee. Long a proponent of retirement legislation seeking to improve access to retirement savings plans for all workers, Neal’s chairmanship would all but ensure that matters related to retirement coverage and security will remain front and center in the new Congress.

Meanwhile, on November 26, House Republicans — in control through December — released a draft tax and retirement package that includes some of the provisions from the Retirement Enhancement and Savings Act (RESA) and the Family Savings Act. As I write, the new package is scheduled to go to a vote, and House passage could lead to enactment before the end of this year.

Expanding Availability of MEPs

Noteworthy provisions include expanding the availability of multiple employer plans (MEPs). This would enable employers to form a MEP under the rules requiring commonality of interest among the employers, or to join a “pooled provider plan” that would be treated as a single plan, with a designated pooled plan provider as named fiduciary. This provision also provides relief from the “one bad apple” rule, under which a disqualifying defect by any adopting employer disqualifies the entire MEP.

Open MEP proposals such as those included in this House package and the similar version included in RESA are designed to broaden the retirement plan options available to smaller employers and help ease some of the fiduciary and administrative burdens associated with plan sponsorship. As a result, they generally enjoy bipartisan support.

Another small business-friendly feature is an increase in the tax credit to $1,500 from $500 for starting a retirement plan, and the establishment of a $500 tax credit for small employers adopting an automatic enrollment feature.  In addition, the cap on deferral rates for automatic enrollment plans would be raised to 15% after the first year, from 10% currently.

A host of other provisions aimed at expanding and preserving retirement savings are also included. By the time you read this, we’ll know if it has passed the House, but it remains to be seen if legislation will be enacted during this session. More than a few Senate Democrats are harrumphing about some of the tax provisions and the perceived rushed process. Yet with Rep. Neal’s presumed leadership in the next Congress, it is likely that many of the components of this package will be back for consideration next year.

Neal’s staff has proclaimed retirement policy as his number one priority, and he has been prolific in his proposals (introduction of 16 bills in this Congress!).  Issues related to the retirement security of American workers seem to generate increasingly rare displays of Congressional unity.

Let’s see if bipartisanship around retirement plan policy will trump (see what I did there?) the current acrimony in Washington.