Washington Climate Continues to Add Uncertainty to Most Legislation; Although Various Retirement Related Issues Push Forward

The combination of looming presidential and congressional elections and continued acrimony with the White House has slowed the pace of legislation and overall action by Congress this year. Additionally, party leaders on both sides of the aisle are concerned with forcing at "risk members" to vote on controversial issues, slowing congressional deliberations even further.

Entitlement spending and overall budget negotiations have combined to take up much of the legislative schedule recently and will likely remain on the calendar after Congress returns from its two week spring recess. In the last days before the Easter recess the House and Senate Committees on the Budget passed budget resolutions that set overall spending limits and the Senate and House Committees on Appropriations will begin deliberations in earnest in April on how to fund the thirteen federal agencies in the face of almost certain Presidential vetoes.

It is likely that the political climate will continue to affect the work that Congress is able to do this year. In fact, the only major legislation to pass may be a bill to continue funding for the Iraq war. This supplemental appropriations legislation may well serve as the only viable legislative vehicle this year in Congress-and many other "interests' may attempt to "pile on" before it passes late this spring. It is a sure bet that congressional leadership will attempt to keep such "add ons" to minimum, given the continual threats of Presidential vetoes.

In spite of the federal stalemates on so many issues, there is some movement on a number of NAGDCA priorities and concerns, including National Save for Retirement Week, Roth 457s and Fee Disclosure, as NAGDCA's Executive Board learned while in Washington earlier last month.

Executive Board Annual Visit

The NAGDCA Executive Board recently held their annual visit to Washington to conduct visits. The day and a half of meetings included meetings with Representatives Sam Johnson (R-TX) and Allyson Schwartz (D-PA). Both members reiterated their strong support for a National Save for Retirement Week Resolution, and told the Executive Board that they would, once again, co-sponsor the Resolution and seek its passage as soon as possible. Other meetings were held with the House Committee on Ways and Means, Senate Committee on Finance, The Joint Committee on Taxation, the office of Senator Gordon Smith (R-OR) and key officials at the U.S. Department of the Treasury.

As part of these meetings the Board discussed NAGDCA's legislative priorities for the coming year including the reintroduction of National Save for Retirement Week, the possibility of making National Save for Retirement permanent, Roth 457s, fee disclosure and technical corrections for the Pension Protection Act (PPA) of 2006.

Legislative Priorities

During the Executive Board visit, NAGDCA distributed it's annual priorities letter letter. NAGDCA's priorities include maintaining the distinctions between governmental defined contribution plans, such as maintaining the exemption from the early withdrawal penalty; the creation of parallel savings opportunities between public and private employees; maximizing unused flexible account dollars; and, permitting non-spousal beneficiaries to roll assets to 457 and 403(b) plans.

National Save for Retirement Week

With last year's co-sponsors-Representatives Schwartz (D-Pa) and Johnson (R-TX)-both members of the House Committee on Ways and Means- committed to move forward, it is likely that the National Save for Retirement Resolution will be reintroduced in the House in April or May of this year. In the Senate, Senator Gordon Smith (R-OR), member, Senate Committee on Finance and Senator Conrad (D-ND), Chairman of the Senate Committee on the Budget, are both committed to reintroducing the Resolution soon in that chamber and have completed a draft that NAGDCA has reviewed. Senators Smith and Conrad were the original sponsors of the first Resolution, passed by the Senate in 2006.

NAGDCA is also working with the Senate and House to make National Save for Retirement Week permanent-although it is likely that it would be extended to one month, as some co-sponsors have suggested. A permanent resolution, would require Judiciary Committee hearings in both the Senate and the House and, ultimately, sign off by the President proclaiming a certain month as National Save for Retirement Month. It is not likely that a permanent measure will work its way through this Congress; however, planning and discussions continue.

Technical Corrections

On March 12, the house passed a technical corrections bill to the PPA on the suspension calendar. HR 3361, the Pension Protection Technical Corrections Act of 2008 passed by voice vote and now must pass the Senate. The Senate, at the end of December, did pass S. 1974, Pension Protection Technical Corrections Act of 2007, on the Unanimous Consent calendar but as the two bills are not identical they must either go to conference or the Senate must pass the House bill before it can be signed into law. As both of these bills passed with out opposition it is possible that this can be passed in the current year.

Roth 457

Last year, NAGDCA's Executive Board added the adoption of Roth 457 plans for governmental employees to the NAGDCA agenda. Since then the Senate Committee on Finance has proposed Roth 457's and a provision authorizing these plans for state and local government employees is currently pending in the Senate Farm bill, H.R. 2419, the Food and Energy Security Act of 2007. Currently it is unclear whether this bill will move forward or whether Congress will pass a simple extension of the measure before year's-end. The provision was also included in a Senate tax bill last year that did not move forward.

Fee Disclosure

Chairman George Miller (D-CA), House Committee on Education and Labor, last year succeeded in bringing fee disclosure to the forefront, holding hearings and introducing legislation-- mainly affecting plans governed by ERISA. His legislation met with substantial opposition by the industry and he is in the process of re-drafting with plans to re-introduce legislation shortly.

Additionally, the House Committee on Ways and Means has conducted one oversight hearing with NAGDCA's President, Mindy Harris testifying as one of a number of witnesses. The Committee is in the process of writing a bill that will contain some provisions affecting disclosure for plans that are not governed by ERISA-however, according to Committee staff, the bulk of the legislation will address fees and how they are designed. There is no further word at this time regarding details of the awaited measure.

NAGDCA works closely with the Ways and Means tax panel and looks forward to reviewing draft legislation when it is available. In the meantime, NAGDCA has added this issue to its overall priorities, calling for fair, transparent and open disclosure of plan fees. Much of the Association's position was developed based on the Fee Disclosure Task Force appointed last year and the survey of NAGDCA membership designed by the Task Force.

NAGDCA has discussed with both the Senate Committee on Finance and the Senate Committee on Health, Education, Labor and Pensions (HELP) whether they have plans to proceed with hearings and legislation, as in the House. Although, these Committees have not ruled out action, it appears, at this time, they are waiting for further developments to unfold in the House.

On all fronts we will continue to work with the Committees of jurisdiction and the key members on the NAGDCA priorities and will keep NAGDCA informed as issues move forward.