Hoffman Gives Washington Update on Retirement Plans
ASPPA News from the Field
2012 Great Lakes Benefits Conference
CHICAGO (June 21, 2012)— The American Society of Pension Professionals & Actuaries (ASPPA) and Internal Revenue Service (IRS) held the 11th annual Great Lakes Benefits Conference at the Hotel Allegro in Chicago. The first session kicked off with an update on current retirement plan legislation and regulations. Craig Hoffman, General Counsel of ASPPA, Jeffrey Turner of the Department of Labor (DOL), Monika Templeman, Director of Employee Plans Examinations at the IRS, and Andy Zuckerman, Director of Employee Plans Rulings & Agreements at the IRS, teamed up to provide this update.
Hoffman updated the audience on how tax reform, the presidential election and legislative initiatives are impacting the retirement industry. One example is the Lifetime Income Disclosure Act of 2011 which is being co-sponsored by Senators Bingaman, Isakson and Kohl. It would require defined contribution plans to include “annuity equivalents” on benefit statements.
Another act that Hoffman spoke about is the Savings Enhancement by Alleviating Leakage in 401(k) Savings (SEAL) Act of 2011. This act would prohibit “credit-debit card” 401(k) loans, allow for repayment of loan offset amounts into an IRA rollover account and direct the IRS to rewrite their regulations to not require a six (6) month suspension after a 401(k) hardship distribution.
Finally, a third act that was reviewed was the Hardship Outlays to protect Mortgagee Equity (HOME) Act of 2011. This act would waive the 10% excise tax generally applicable to distributions made before a participant attains age 59 ½ for “Qualified Principal Residence Loans.”
Hoffman finished his speech with an update on tax reform. He explained that there is support throughout Congress to lower tax rates and remove or limit certain tax deductions. One area of particular concern is the tax deduction for making contributions to a qualified retirement plan. Different commissions have suggested reducing the annual maximum amount that may be contributed to a participant’s account during a plan year.
ASPPA is working hard to explain the value of maintaining current limits and the potential negative impact on the formation and maintenance of qualified plans if there is a reduction. Hoffman reviewed the five myths surrounding retirement plans, such as “tax incentives for retirement savings are ‘lost revenue’” and “less than half of American workers are covered by a retirement plan.”
Jeffrey Turner of the DOL started his discussion explaining the process of how regulations are published. He reviewed the history of the fiduciary definition regulations. Turner explained that a lot has changed in the retirement plan marketplace and as a result there is a need to revise the definition of fiduciary.
Turner also explained that there are four active fee projects at the DOL. This includes the very popular 408(b)(2) regulations and the 404-a-5 regulation. There are also fee disclosure projects on the health and welfare side of the DOL. Turner anticipates that health plans will be subject to similar fee disclosure rules that have now gone into effect for retirement plans.
Monika Templeman and Andy Zuckerman of the IRS reviewed a number of items including Interim Amendment Guidance, Letter Forwarding Program, 403(b) Pre-approved Program and the new EPCRS Revenue Procedure.
— Daniel Kravitz
President, Kravitz, Inc. and Cash Balance Online, Inc.
ASPPA member since 1997
Category: Member Focus
