Pension & Benefits News Congress needs to modernize laws governing DC/401k plans
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Tuesday, May 12, 2020

Congress needs to modernize laws governing DC/401k plans

By Pension and Benefits Editorial Staff

To help strengthen large employer plans, lawmakers need to modernize the rules governing defined contribution (DC) and 401k plans, according to the ERISA Industry Committee (ERIC). At a recent panel briefing Congressional staff, Annette Guarisco Fildes, ERIC’s president and CEO, and Aliya Robinson, senior vice president of compensation policy at ERIC, discussed a series of proposals that ERIC is promoting to modernize DC and 401k plans, and how those ideas can be used to “strengthen retirement security for millions of workers and families across the country.”

“Defined contribution plans provide significant retirement benefits but can be much more effective retirement plans if Congress modernized some of the underlying rules that were adopted in the 1980s,” said Fildes. “We asked our member companies that are on the front lines of redefining employee benefits, what updates needed to be made so that the plans would work for their employees in today’s world.”

ERIC’s proposals include:

  • modifying and providing additional flexibility to the definition to a highly compensated employee;
  • expanding contribution opportunities for older workers and workers who have taken unpaid leave;
  • permitting participants to withdraw or use limited, pre-tax elective deferrals for critical short-term financial needs without imposing an early distribution tax penalty;
  • allowing employer contributions that match student loan payments;
  • promoting electronic delivery of plan notices and disclosures;
  • simplifying notices and disclosures; and
  • relaxing required minimum distribution rules.

Source: ERISA Industry Committee (ERIC) , https://www.eric.org/wp-content/uploads/2019/11/Modernizing-the-401k-Plan-System.pdf.

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