How About Doing Something Good for the System?
I am tempted to rail against PBGC premium increases (again) today, but unfortunately it does no good. When deals are cut without policy people in the room, all the educational effort in the world is not going to trump the revenue — even if it is phantom as far as availability for spending is concerned. So, let me talk about something positive: proposals to make it easier for defined benefit plans.
ASPPA has a booklet of Proposals to Enhance the Private Retirement System. There are a number of proposals that would apply equally to defined benefit and defined contribution plans, like allowing an employer to adopt a plan after the end of the year before the tax filing due date, having a simple and reasonable framework for interim amendments and eliminating that strange age 32-35 notice period for a QPSA, to name just a few.
Nearly all of these broader proposals made it into Sen. Orrin Hatch’s (R-Utah) SAFE Act in the last Congress (S. 1270-113th). There are also defined benefit simplification proposals (see pages 27-30 of the proposals document) that were developed by what was then ASPPA GAC’s defined benefit subcommittee. These proposals made it into Sen. Tom Harkin’s (D-Iowa) “USA Accounts” legislation in the last Congress (S. 1979-113th).
The defined benefit proposals included:
- Do not reduce assets by credit balances for purposes of applying the funding-based limitations in IRC §436 or for determining whether or not quarterly contributions are required. (The reduction would continue to apply for purposes of determining the required minimum contribution, of course.)
- Permit an election to discount contributions from the final due date.
- Simplify elections and notices by: (1) considering all PPA elections to be timely if made no later than the filing deadline for the Schedule SB for that plan year; and (2) providing a single AFN deadline for small and large plans that were at least 80% funded in the preceding year which coincides with the deadline for providing the Summary Annual Report.
The American Retirement Association’s Legislative Affairs Committee will soon begin the process of updating proposals with a goal of having a new set published for the new Congress in 2017. It will be an arduous process, but well worth it when you see a good proposal in a new piece of legislation. ACOPA’s own Martella Joseph is chairing that effort. (Thank you, Martella!) If you have thoughts about what we should be adding to (or deleting from) the proposals, please send me a note about it. I will pass DB ideas on to ACOPA GAC for review (and direct non-DB ideas elsewhere). ACOPA GAC will then be submitting ideas to the Legislative Affairs Committee for consideration.
So as you are working away and thinking “it would be so much easier if...”, just write it down and send it on over. I look forward to reading it.
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