2019 Road Map—What Retirement Savings-Related Changes May Be Ahead?
By Robert Shipp, CIP, CHSP, QKA
With a tumultuous 2018 behind them, Congress and regulatory agencies aim to accomplish a great deal in 2019. This is especially true in the arena of retirement savings-related laws and guidance. As part of your preparation for 2019, it’s worth considering some of the potential changes those in Washington D.C. may bring to bear. Below are some key items to keep tabs on in 2019.
Proposed Hardship Regulations – In late 2018, the IRS released proposed changes to hardship distribution rules. The changes are the result of 2018 legislation and were expected to be finalized early this year. The timeframe for the release of the final regulations was delayed due to the partial government shutdown.
Required Minimum Distributions (RMDs) – One provision proposed in recent legislation would waive the requirement that an RMD be taken if a taxpayer’s combined IRA, 403(b), governmental 457(b), and qualified plan balance is below $50,000. A provision in a separately proposed bill would not require RMDs to be taken unless the taxpayer’s combined balance is above $250,000. Another bill would require most nonspouse beneficiaries to distribute inherited assets that are above a certain threshold amount within five years. Sooner or later, some kind of RMD-related change is likely.
Extended Plan Establishment Deadline – The timeframe to establish a retirement plan could be extended to the business’ tax return due date, including extensions, as a provision allowing this is contained in two separately proposed bills.
Relaxed Safe Harbor Rules – Employers could add a safe harbor provision to their 401(k)-type plans up until the deadline for removing excess contributions, provided the safe harbor contribution is made in the form of a guaranteed non-elective contribution from the employer, if either of two bills containing this provision should become law.
Multiple Employer Plans – Proposed legislation and regulations resulting from an executive order would expand and enhance options for employers to adopt multiple employer and similar-type plans, thus—it is hoped—the cost and administrative responsibility would be shared among employers
Auto Portability – The Department of Labor (DOL) has weighed in on a proposed program that would create automatic portability of small balance accounts of unresponsive employees, sending them to “default IRAs.” Although the DOL’s approval of this program is limited to the applicant proposing the program, the DOL has requested public comments and could consider more widely applicable guidance
Employer Requirement to Have Plan – While several states now have requirements that mandate most employers to offer a state-coordinated retirement program if they offer no other retirement plan, no such requirement exists at the federal level. Two proposed bills would change that if enacted, requiring that employers of a certain size offer a retirement plan.
Electronic Delivery the Default – In an attempt to modernize disclosure procedures, create easier administration, and provide employees with notices and information in a format that they may find more useful, several bills have been introduced that would make electronic delivery the default option for delivering employee notices and other information.