On July 24, the House of Representatives passed H.R. 397, the Rehabilitation for Multiemployer Pensions Act, also known as the Butch Lewis Act. This bill would establish a new Pension Rehabilitation Administration within the Treasury Department and would create a trust fund to make loans to troubled multiemployer defined benefit pension plans. The final vote was 264 to 169, with 29 Republicans joining all the Democrats voting in favor.
For NAGDCA members it is worth noting that the cost of the new program would be partially offset by changes to RMDs for inherited IRAs and dc plans, including governmental plans — the so-called “stretch RMD” provisions (Sec. 9, H.R. 397). If this seems familiar, it may be because we just saw it! It is the same language that was included as a pay-for for the SECURE Act (Sec. 401, H.R. 1994) which passed the House with massive bi-partisan support on May 23. The provision would require distribution of inherited account assets within ten years of the death of the account owner, with a few exceptions. If enacted, these changes would raise around $15 billion in revenue over ten years. For governmental plans, the new rules would apply after December 31, 2021. Since the Senate has yet to take up the SECURE Act, this provision was still available to the House as an offset for the Butch Lewis Act.
The Butch Lewis Act faces an uncertain future in the Senate where the rules generally require broad bi-partisan support for bills to pass.
Despite enjoying broad bi-partisan support, the SECURE Act is currently stalled in the Senate. Though it is largely aimed at increasing access to employer-sponsored retirement plans in the private sector, the bill does include some provisions that would affect governmental defined contribution plans.
- Sec. 114 would increase the age for beginning RMDs to age 72.
- Sec. 109 would allow participants to take a distribution of a lifetime income investment and roll it into another plan, without the usual withdrawal restrictions, if their plan no longer offers that investment option.
- Sec. 113 would permit “qualified birth or adoption distributions” from a retirement plan, with certain conditions.
Senate Finance Committee leaders are working to clear the anonymous holds that some senators have placed on the bill so that it can pass the Senate by unanimous consent.