401(k) Specialist Issue 1 - 2020 - 16

401(k) BEST PRACTICES
mum distributions (RMDs) from age 70½ to
age 72, Portman-Cardin seeks to take things a
few steps further.
For example, it would raise the age for
RMDs to age 75 by 2030 and includes a
broader set of reforms-57 specific provisions-designed
to help more Americans
save for their retirement.
If the SECURE Act would have come
up for discussion on the floor of the Senate
last year, some of the additional provisions
Portman-Cardin may well have been added
to the SECURE Act.
" I would have preferred to have the
opportunity to take it through committee
and expand it. But then that would have
been very, very difficult-I would say impossible-to
get the broader bill done this
" Passing the
SECURE Act is
a big victory
that will help
ensure that all
hard-working
Americans
have a chance
to build a nest
egg for their
retirement. "
last year, " Portman said. " My conclusion
was this [the SECURE Act] is great for
expanding retirement savings-not that we
shouldn't do more. And that's what Portman-Cardin's
about. But this was a great
foundation. And we just we couldn't let the
opportunity pass. "
Portman-Cardin in 2020
No, it's not a presidential ticket, but
there will be some " campaigning " to get
the further reforms in the Portman-Cardin
bill passed in 2020, which Portman said
" addresses really what I think are the four
critical issues in retirement today. "
He outlines those issues like this:
1) Boomers need to be saving more for
retirement. " We have a catch-up con12
Key SECURE Act Provisions
M
any of the provisions of the SECURE Act will have a
wide-ranging impact on retirement savings plans, and 401(k)
plans in particular. Here's a brief overview of some of the key ones:
* Open Multiple Employer Plans: The Open MEP provision
will make it easier and more economical for smaller employers
to offer retirement plans by allowing for the creation of
pooled retirement plan providers. It removes the common
nexus requirements and allows Open MEPs for employers that
don't share common traits to be administered by the pooled
plan provider. The provision also protects small employers in
Open MEPs from penalties if other members violate fiduciary
rules, also known as the " one bad apple " liability risk that a
non-conforming member can pose to an entire plan, long been
a stumbling block for MEPs.
* Safe harbor for annuities in 401(k)s: Section 204 gives fiduciary
safe harbor to 401(k) plan sponsors who include annuities
among offerings to plan participants. Many defined contribution
plan sponsors have been reluctant to offer annuities due to concerns
about fiduciary liability if the annuity provider becomes insolvent.
Under Section 204, if an annuity provider chosen for a 401(k) plan
were to go out of business or defraud plan participants, employees
would not be able to sue the employer afterward.
* Lifetime income disclosures: Requires 401(k) plan sponsors
to inform participating workers of the projected monthly
income they could expect at retirement based on their current
account balance. When additional guidance is issued, plan sponsors
will need to determine whether this necessitates additional
communications to plan participants, especially if an annuity is
not actually an option for a plan distribution.
* Enhanced portability of lifetime income options: Permits
qualified DC plans, 403(b) plans or governmental 457(b) plans
to make a direct trustee-to-trustee transfer to another employer-sponsored
retirement plan or IRA of lifetime income investments
or distributions of a lifetime income investment in the
form of a qualified plan distribution annuity, if a lifetime income
investment is no longer authorized to be held as an investment
option under the plan.
* Elimination of the Stretch IRA: Most IRA beneficiaries
(not a spouse) are now required to deplete an inherited IRA
within 10 years. Prior, IRAs could be " stretched out " over beneficiaries'
lifetimes, providing decades of tax-deferred (or tax-free
in the case of Roth IRAs) compounding. This is the provision
that is expected to pay for virtually everything else in the SECURE
Act, bringing in an estimated $15.7 billion over 10 years.
16
ISSUE 1 2020 | 401kSpecialist.com
http://www.401kSpecialist.com
401(k) Specialist Issue 1 - 2020

Table of Contents for the Digital Edition of 401(k) Specialist Issue 1 - 2020
