NAIFA Wins Major Victory in Enactment of the SECURE Act

With this victory under its belt, NAIFA stands ready to oppose state-run retirement plans.

By Judi Carsrud and Julie Harrison

NAIFA recently scored a major victory when Congress enacted the Setting Every Consumer Up for Retirement Enhancement (SECURE) Act. With some of the most significant changes to retirement savings rules, the act will make it easier for consumers to adequately save for retirement. NAIFA has been working with lawmakers for many years to address hurdles to saving for retirement and providing a guaranteed income for life.

The SECURE Act

Consisting of 29 provisions, the SECURE Act offers tax credits to employers starting plans, credits for employers who provide automatic-enrollment features in their plans, a safe harbor for employers choosing to provide annuities in the investment options, portability of annuities and expanded opportunities to finding a plan to meet employers’ needs.

A requirement that plan statements illustrate the amount of monthly income for life that might be expected from the account balance is a useful planning tool so that participants are able to adequately save to meet their income objectives during retirement.

There are a few non-retirement provisions in the legislation, including a “fix” to the Tax Cuts and Jobs Act tax law impacting Gold Star families that inadvertently increased the amount of taxes those families would pay, and expansion of allowable expenses from a Section 529 educational account.

The new law includes changes to required minimum distribution (RMD) rules, although not all are favorable. Under the new law, RMDs are not required until age 72 (up from age 70-1/2), which is easier to administer and recognizes the fact that because people are living longer, starting distributions later in life is beneficial for longterm financial security.

The new law also includes changes to Multiple Employer Plans (MEPs), creates Annuity Safe Harbor and Portability enhancements, increases tax credits for employers and modifies required minimum distributions for inherited IRAs. Visit www.naifa.org. for more information.

State-run retirement plans

Although the SECURE act has been hailed as a major step in helping Americans better save and plan for their financial future, some states are seemingly unfazed by its power and several state lawmakers are moving forward with their own legislation to create state-run retirement plans for private-sector workers. This requires certain employers to auto-enroll their employees in these plans.

Bills exist in the following states:

*Virginia: Del. Hala Ayala (D) introduced legislation that would create a mandatory program that would allow employees of private employers to contribute to a defined contribution retirement plan.

*Maine : Sen. Eloise Vitello (D) introduced an Act to Promote Individual Retirement Savings through a PublicPrivate Partnership. NAIFA-ME had a large role in defeating a similar measure in the past but Democratic leadership in the Senate is making it a priority in 2020.

*Indiana: A new bill would require the Interim Study Committee on Pension Management Oversight to study the creation of a state-run retirement “Secure Choice” program for private employees who do not have access to a pension or retirement plan through their employers.

NAIFA gets ready

NAIFA stands ready to take its opposition to state-run retirement plans head on across the country. Policy experts at NAIFA-National are compiling statistics and data in opposition to state-run retirement plans, especially in light of the passage of the SECURE Act.

Together with state chapter advocates, NAIFA is educating legislators that removing the hurdles involved in adopting into a multiple employer plan will make it much easier for businesses to provide retirement plans to their employees and lessen the supposed “need” for state-run programs.

New grassroots technology and a new state legislator relationship tracking system located on NAIFA’s new Advocacy Action Center (www. naifa.org) will also support the challenge that NAIFA will bring against state-run retirement plan legislation.

Using its considerable influence and political prowess, NAIFA was instrumental in getting the SECURE Act introduced, co-sponsored, voted on by the tax-writing committees, passed on the House floor, included in last year’s spending legislation and signed into law on December 20, 2019.

A great big thanks

We would like to thank the thousands of NAIFA members who reached out to their lawmakers via email and phone calls, wrote letters to the editors of local newspapers, and met in person in the District and on Capitol Hill in Washington DC. We could not have done it without you!