Summer 2008

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

Looming Elections and Stalled Legislation

Congress has recently returned from the Memorial Day recess and the November elections have left Congress at a standstill. Party leaders, on both sides of the aisle, are frequently unwilling to put endangered incumbents at risk by forcing tough votes and as a result very little legislation has moved forward. Additionally Democrats have won two recent special elections in districts that have traditionally voted Republican and Speaker Pelosi has no intention of forcing these members to vote on any issues that could be used against them in the coming months.

In other election news, being in the minority has not been kind to Republicans. A few Republicans have resigned during this session of Congress, but many more are retiring and with the recent announcement that the National Republican Congressional Committee treasurer is being investigated for fraud the news has continued to get worse. Many of the retiring Republicans are also from the moderate wing of the party and represent Democratic leaning districts further complicating issues for the minority in there attempt to hold on to these seats. Seven Senators and forty-one House members are leaving their seats open and only nine of the House members are Democrats. Many of the open Senate seats will be in play this year and while most of the Democratic open seats are in overwhelmingly Democratic areas that is not true for Republican seats.

One of the only bills that is likely to pass this year is the Iraq Supplemental Appropriations package that will continue funding for the Iraq war and even that has been stalled over fights in the Senate and the House over domestic spending provisions that Congress wants to include in the measure. In a stunning move much of the war funding in the House was not passed as most Republicans voted present on the funding part of the legislation and many anti-war Democrats voted no.

Negotiations on the measure continued into June and have intensified since the week long congressional Memorial Day Recess came to an end.
 

National Save For Retirement Week

Following up on the success of last year’s resolution NAGDCA has been working with last year’s co-sponsors to reintroduce the National Save for Retirement Week resolution which, this year, will be October 19-25. Senators Smith (R-OR) and Conrad (D-ND) as well as Representatives Schwartz (D-PA) and Johnson (R-TX) have all committed to reintroducing the Resolution and it should be introduced in the coming weeks. It is likely that the measure will be introduced sometime after the Iraq supplemental appropriations legislation, as Senator Conrad chairs the Senate Committee on the Budget and has been working tirelessly to clear this legislation before moving onto other priorities.

Last year the Resolution was introduced at the end of June, right before the July 4 congressional recess, and it appears that we are on track to have it introduced in the same time frame. The Resolution had wide support in both houses of Congress and should pass without difficulty on the Unanimous Consent Calendar in the Senate and under Suspension of the Rules in the House.

Roth 457

The Roth 457 provisions were removed during the House Senate Conference on the Farm Bill (H.R. 2419), however, they have since been inserted in H.R. 2881 (FAA Reauthorization Act of 2007). The provisions have Senate support because they are considered "revenue raisers".

The House of Representatives Committee on Ways and Means is currently opposed to expanding the Roth provisions and fought to have them stripped out of the Farm Bill. Even with this opposition, because the Roth 457 has been determined to raise revenue and not spend money, it will continue be brought up and will probably become law at some point. In the meantime, it has also been reported that key members of Congress are seeking to establish a Roth plan for federal employees.

 

Food Stamps

A provision has been included in a different section of the Farm Bill that would exclude retirement income from 403(b) and 457 plans from calculations to determine eligibility for Food Stamps. Under current law only 401(k) plans are under this provision.

The Farm Bill had originally been passed by both Houses of Congress and sent to the President where it was subsequently vetoed. The veto was then overridden but it was determined that some trade language was inadvertently excluded, therefore both chambers have repassed the legislation and are sending it to the President who has promised to veto the bill again. There is enough support to override the veto in both the House and the Senate again if the President follows through on his veto threat.

 

Industry Roundtable and Fee Disclosure

NAGDCA held its fourth Industry Roundtable in Washington, DC in mid-May. During the Roundtable, attendees heard from the Treasury Department, House Ways and Means and Finance Committee tax counsel.

Panelists focused on fee disclosure with Ways and Means indicating that they planned to pursue legislation, along with the House Education and Labor Committee. Senate staff did not rule out the idea of the Senate focusing on such legislation in the future, but projected that, if momentum there picked up it would not be until next year.

Questions still remain regarding what should be disclosed and how much disclosure is necessary. This dilemma has plagued the two committees of jurisdiction in the House for the past year. Chairman George Miller (D-CA), House Committee on Education and Labor, reintroduced H.R. 3185 (401(k) Fair Disclosure for Retirement Security Act of 2007) after serious opposition from many in the industry. The new bill was marked up in Mid April and passed the Committee on Education and Labor by a near party line vote and now faces an uncertain future on the House floor.

One note on this bill is that it amends the Employee Retirement Income Security Act of 1974 (ERISA) therefore the Miller legislation does not impact NAGDCA members at this time. In order to do so, it will need to be joined with another measure coming out of Ways and Means and, in that regard, can be used as a starting point for legislation that does include governmental defined contribution plans.

 

Older Workers Legislation

Senator Smith, on April 29, introduced S. 2933 (A bill to improve the employability of older Americans). Currently the bill has two cosponsors, Senator Conrad and Senator Kohl (D-WI), Chairman, Senate Special Committee on Aging. Although the odds of this legislation passing during this session of Congress are slim Senator Smith introduced the bill so that it could be reviewed and commented on for possible reintroduction next year.

The bill would authorize a prohibition of benefit reductions due to phased retirement, allowance of delayed retirement social Security credits until age 72, reduction in the Social Security benefit offset resulting from certain earnings, creation of a national resource center on aging and the workforce, removal of the penalty under the civil service retirement system for part-time service, improvement of the workforce investment act (WIA) for older workers, expansion of eligibility for the Work Opportunity Tax Credit (WOTC) to include older workers and clarification of normal retirement age.

 

IRS Governmental Plans Roundtable

The IRS honored NAGDCA with an invitation to its recently held governmental plans roundtable. Although the Roundtable focused mostly on state and local government defined benefit plans and plans to increase federal scrutiny over these plans, this Roundtable offered an opportunity for NAGDCA to interact with the IRS, as the Association continues its longstanding relationship with the Service.