Washington Update – NAGDCA Endorses New Legislation | An Eye on Student Debt Legislation
NAGDCA Endorses the Retirement Security and Savings Act
Last week NAGDCA announced its support for the newly introduced Retirement Security and Savings Act. The bipartisan legislation, introduced by Senators Ben Cardin (D-MD) and Rob Portman (R-OH), contains many provisions that NAGDCA supports, among them a provision to allow governmental 403(b) plans to invest in the same investment vehicles that private sector 401(k) plans are allowed to invest in.
On April 29, Senate Finance Committee Chairman Ron Wyden (D-OR) introduced S. 1443, the Retirement Parity for Student Loans Act, to allow employers to make “matching” contributions to employees’ retirement accounts while employees pay off their student loans. The legislation is applicable to governmental as well as private sector plans.
Under the legislation, employers may – but are not required to – offer this matching option. If a plan does choose to offer the benefit, the plan must make the student loan benefit available to all employees who are eligible to participate in the plan. Additionally, the benefit must follow the same matching rules as traditional retirement contributions, e.g. 100% match on the first 3% of salary contributed toward retirement or student debt. If an employee makes both retirement and student debt contributions, an employer may consider student debt only up to the annual contribution limit for retirement plans, i.e. $19,500 for 2021. Treasury and IRS are tasked with publishing model amendments for plans to use for simple adoption of this benefit.
The popularity of various proposals to help people tackle student debt has grown rapidly in recent months, with 28 assorted bills introduced in the first five months of this Congress alone. No legislation on the topic has yet come up for a vote, but we expect this to remain a hot topic in the months ahead.
By Carly Miller|2021-05-26T11:26:12-04:00May 26th, 2021|Updates from Washington|Comments Off on Washington Update – NAGDCA Endorses New Legislation | An Eye on Student Debt Legislation