FOR IMMEDIATE RELEASE
Comments include factors supporting request for exemption for government plans; barring full exemption, requests delay of two additional years beyond effective date for the private sector
Lexington, KY, January 10, 2024—The National Association of Government Defined Contribution Administrators (NAGDCA) today announced that it has sent comments to legal counsel at the U.S. Department of the Treasury and Internal Revenue Service in response to the Notice of Proposed Rulemaking: Long-Term, Part-Time Employee Rules for Cash or Deferred arrangements Under Section 401(k) (REG-104194-23).
NAGDCA is the premier professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans. NAGDCA governmental members oversee plans for participants from 60 state and territorial government entities, and 146 local government entities, including counties, cities, public safety agencies, school districts, and utilities.
Referencing its comment letter submitted in October 2023, NAGDCA requests further consideration and solicitation of additional comments prior to issuance of a final decision, and reiterates its position that these rules not apply to governmental plans, consistent with treatment under Code section 410(a). Specifically, the letter, authored by NAGDCA Executive Director Matt Petersen, identifies the following factors as the basis for NAGDCA’s request for exemption:
- Consistent Code Treatment
- Grandfathered Plans
- Relief Not Applicable
- Policy Justifications
- Impacts Non-401(k)/403(b) Plans
According to Petersen, “These arguments justify special treatment for governmental plans. But if a full exemption is not granted, we respectfully request a further delay to the effective date to allow our members adequate time to implement this guidance.”
Further, Petersen writes, “At a minimum, the effective date of these rules should be delayed two additional years beyond any transition period provided to the private sector, as is typical with amendments for other law changes.”
“Lastly, if the effective date of this provision cannot be changed, we seek broad transition relief similar to that granted for Roth catch-up contributions be provided. And, absent that, at the very minimum, a reasonable, good faith compliance standard (similar to what is provided for Code section 401(a)(9) compliance) for this provision be provided due to the complexities and uniqueness of governmental plans,” Petersen concludes.
The full letter may be accessed here.
ABOUT NAGDCA
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. Additionally, NAGDCA is a co-founder with the Employee Benefit Research Institute of the Public Retirement Research Lab, a retirement industry-sponsored collaborative effort of the Employee Benefit Research Institute. The PRRL mines data from the PRRL Database, the first-ever database specific to public sector plan- and participant-level defined contribution data, to produce research aimed at enhancing understanding of the design and utilization of public sector defined contribution retirement plans. NAGDCA also conceived National Retirement Security Week to encourage retirement saving among government workers. Through its efforts, National Retirement Security Week evolved into National Retirement Security Month, a national effort to inspire American employees to save adequately for a secure retirement that is observed throughout the retirement industry during the month of October. It has received bipartisan Senate resolution since its conception in 2006. To learn more about NAGDCA, visit https://www.nagdca.org/.
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