Winter 2010

By Susan J. White and Jonah Mainzer, Susan J. White and Associates, Inc.

President Obama and Congress faced ongoing struggles with the economy, as well as an uphill battle to pass major health reform legislation in 2009. The year began with the passage of a major economic stimulus measure and ended with passage of health care legislation in the both the House and Senate.

In the face of continuing economic woes, the Administration proposed a second economic/jobs package—the Jobs for Main Street Act, and, as the House and Senate negotiate final health reform legislation, the President has turned much of his attention to passage of this proposal. In fact, the House of Representatives approved its version of the jobs bill in a close vote (217-212) on December 16. The Senate has yet to act.

Fees Disclosure, Investment Advice and Saver’s Credit
Although savings and retirement issues were not top priorities in 2009, some important legislation was introduced in Congress and there will likely be additional activity this year. The Committee on Education and Labor, led by Chairman George Miller (D-CA) produced H.R. 2989, the 401 (k) Fair Disclosure for Retirement Act of 2009.

The bill amends ERISA and requires reporting and disclosure rules for individual account plans. It also seeks to regulate how independent investment advice for participants and beneficiaries is conducted.

The Committee on Education and Labor is in the process of working out a joint bill with the House Committee on Ways and Means. Under a joint bill, it is our understanding that governmental defined contribution plans will also be subject to the provisions which may include, some level of unbundling and a requirement that fees be disclosed annually. The agreement may not address investment advice but would instead rely on pending Department of Labor regulations. It is our understanding that, although considered, there will not be a requirement that an index fund be offered.

A merged bill could move forward for vote by the full House within the next few months. There has been very little activity, however, in the Senate on these issues. Senate committees and staff report that there is definite interest, however, they indicate that the members want more in-depth review of the issues before agreeing to legislation.

On other fronts, Representative Earl Pomeroy (D-ND) introduced the Saver’s Credit H.R. 1961, The Savings for American Families’ Future Act of 2009. NAGDCA supports expansion of the Saver’s Credit and has provided a number of recommendations on how to ensure deposit of the credit into current defined contribution arrangements. This and other retirement related issues may have to wait for tax reform, which Congress and the Administration plan to address, or other legislative vehicles.

National Save for Retirement Week
National Save for Retirement Week was in effect during the week of October 18 and was extremely successful. H. Res. 662 was co-sponsored by Representative Sam Johnson (R-TX) and Representative Allyson Schwartz (D-PA), both members of the Committee on Ways & Means with jurisdiction over state and local government plans. Representative Schwartz also spoke about the National Save for Retirement week in a statement before the House of Representatives and in a Dear Colleague letter sent to members of the House. The letter contains a link to NAGDCA’s website for further information on Save for Retirement Week.

A companion resolution was introduced and passed in the Senate, S. Res. 234, originally sponsored by Senators Kent Conrad (D-ND), Chair of the Senate Committee on the Budget and a member of the Senate Committee on Finance, and Mike Enzi (R-WY), the ranking Republican on the Senate Committee on Health, Education, Labor and Pensions and a member of the Senate Committee on Finance. Senator Ben Cardin (D-MD) joined as an additional co-sponsor soon after the resolution was introduced.

State and local governments throughout the country held events promoting National Save for Retirement Week, and the federal Thrift Savings Plan used the Week for promotion events.

Roth 457
NAGDCA continues to advocate strongly for a Roth 457, and met recently with the House and Senate tax committees, as well as the Department of the Treasury to discuss the issue and recently sent a letter to key members of Congress reiterating NAGDCA’s well established advocacy of the Roth 457.