New bipartisan retirement reform legislation introduced by U.S. Ways and Means Committee includes NAGDCA-advocated for provisions beneficial to public sector employees and retirees
FOR IMMEDIATE RELEASE
Lexington, KY, October 28, 2020—The National Association of Government Defined Contribution Administrators (NAGDCA) today expressed gratitude to House Ways and Means Committee Chairman Richard Neal and Ranking Member Kevin Brady for introducing the Securing a Strong Retirement Act of 2020. NAGDCA is the premier professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans.
“The National Association of Government Defined Contribution Administrators applauds House Ways and Means Committee Chairman Richard Neal and Ranking Member Kevin Brady for introducing the Securing a Strong Retirement Act of 2020,” stated NAGDCA Executive Director Matt Petersen. “We especially appreciate that the new Act incorporates provisions NAGDCA endorses and has long been advocating Congress to enact.”
Specifically, the proposed legislation includes the following NAGDCA-endorsed provisions helpful to public sector defined contribution, deferred compensation plan participants and retirees:
Eliminate the “first day of the month” rule for 457(b) plans. Current law requires that deferral changes be made prior to the first day of the month in which the change is to commence. This was enacted as an administrative convenience prior to the advent of modern recordkeeping technology. Now it is an unnecessary impediment to participants’ ability to manage their retirement assets.
Enable use of collective investment trusts (CITs) by 403(b) plans. This provision will provide public school employees and other 403(b) plan participants with access to the same lower cost investment vehicles available to other state and local government employees.
Permit 457(b), 401(a), 401(k), and 403(b) plan participants to make qualifying charitable distributions (QCDs) up to $130,000 beginning at age 70 ½. Current law allows QCDs of up to $100,000 from traditional or Roth IRA accounts to be excluded from gross income each year. The taxpayer’s required minimum distribution (RMD) may be considered a QCD and, as such, be distributed tax free directly to the qualifying organization. To take full advantage of a QCD as an RMD under current law, a participant in a governmental deferred contribution plan would have to roll plan assets into an IRA prior to taking the RMD. This bill would increase the QCD amount permitted to $130,000 and allow plan participants to make QCDs directly from their plans, eliminating the need for this rollover step, beginning at age 70 ½.
“As exhibited by this proposed legislation, Chairman Neal and Congressman Brady continue to demonstrate bipartisan leadership to advance legislation to improve retirement security for all Americans,” stated Joshua Luskin, NAGDCA President and Director of Plan Administration for the Indiana Public Retirement System. “NAGDCA endorses these important improvements to the defined contribution, deferred compensation plans that state and local governments offer their employees.”
The proposed legislation released by the Ways and Means Committee of the U.S. House of Representatives was introduced by Committee Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX). It builds on the landmark Setting Every Community Up for Retirement Enhancement (SECURE) Act. Signed into law in December 2019, the SECURE Act is the most comprehensive retirement security legislation in more than a decade.
NAGDCA provides education, information, and training in all aspects of public plan administration to support members in creating plans that enable secure retirement outcomes for their participants. To encourage a grassroots movement for societal change around retirement, NAGDCA conceived and introduced National Retirement Security Week to Congress. Resolution for the creation of National Retirement Security Week was passed by the Senate in 2006 and continues with bipartisan support annually. To learn more about NAGDCA, visit https://www.nagdca.org/.
# # #
Robin Schoen Public Relations