What’s New In Washington: Legislative Update

Plan Sponsor Quarterly Update

Spring Edition 2024

Though there’s certainly nothing to rival SECURE 2.0,there are a number of retirement-related bills winding their way through Congress.

Technical Corrections for SECURE 2.0

The only bill likely to pass this year is a bill to make several corrections to provisions of SECURE 2.0. The provision mostlikely to impact employers is the fix to the higher catch-up limit for ages 60, 61, and 62 that goes into effect for2025. The bill would correct the special catch-up limit tobe 150% regular deferral limit for 2025 (not 2024).

Progress for 403(b) Plans

In early March, the House passed the Retirement Fairness for Charities and Education Institutions Act, which permits 403(b) plans to invest in collective investment trusts. This is a big step forward for 403(b) plans! The act — part of the Expanding Access to Capital Act of 2023 — is now with the Senate; one step closer to enactment.

Women’s Retirement Protection Act

Though variations of this bill have been introduced in several prior sessions, the latest version of this bill was introduced in the Senate in July 2023. It is currently with the Senate Committee on Health, Education, Labor, and Pensions (the HELP Committee). If enacted in its current form, the bill would require spousal consent of nearly all distributions from defined contribution plans (including401(k) plans).

Anti-ESG Bills

There are currently at least two bills in the House that address ESG (environmental, social, and governance) factors in retirement plan investing. The first, the No Discrimination in My Benefits Act, would amend ERISA Section 404(a)(1) to prohibit the consideration of “race, color, religion, sex, or national origin” in “selecting, monitoring, and retaining any fiduciary, counsel, employee, or service provider of the plan.” The second, the RETIRE Act, would amend ERISA Section 404(a) to require that fiduciaries make investment decisions based solely on “pecuniary” factors (mirroring now-rescinded Trump-era ESG guidance).

Senate Hearing on Retirement Savings

On February 28th, the Senate HELP Committee held a hearing titled “Taking a Serious Look at the Retirement Crisis in America: What Can We Do to Expand Defined Benefit Pension Plans for Workers?” While the title suggests the hearing would be focused on pension plans, they heard testimony on the current retirement system more broadly. Unsurprisingly, there was debate about the Retirement Savings for Americans Act (RSAA) —a Senate bill that would, among other things, create a federal government retirement plan in which workers who do not have a plan at work would be automatically enrolled and could receive a match that is more generous than the Saver’s Match available to those with an employer plan. Opponents of RSAA argue that this would incentivize employers to stop providing retirement plans and shift the cost of employees’ retirement to the federal government. This debate is a preview of the continuing discussion on how to expand the number of Americans who can save at work and how to improve the retirement outcomes of all Americans.

These changes haven’t occurred yet — but plenty on the horizon! Now is a great time to take stock of the new legislative changes in SECURE 2.0 to ensure you’re ready when the next big retirement plan legislation passes.

Photo of Kelsey Mayo

by Kelsey Mayo

Partner, Poyner Spruill

Kelsey’s practice is focused in the areas of Employee Benefits and Executive Compensation. She works with business owners and HR executives to understand and manage employee benefits and executive compensation arrangements. She routinely represents clients before the Internal Revenue Service, Department of Labor, and Pension Benefit Guarantee Corporation and has extensive experience in virtually all aspects of employee benefit plans and executive compensation arrangements.