On the closing day Thursday of the Broadridge Fi360 Solutions Annual Conference 2021, one of the annual headliners, Faegre Drinker fiduciary expert Fred Reish, predicted that the comprehensive retirement reform legislation known as “SECURE 2.0” currently making its way through Capitol Hill will become law before the end of the year.
“Retirement plan legislation is one of the few areas where the legislation is for the most part—and has been—bipartisan. So we’re going to get retirement plan legislation,” Reish said during his afternoon session, titled, “Legislation, Regulation, Litigation, Examination: An Update About Retirement Issues.”
“This thing has legs,” Reish said. “I think within a matter of months it will be passed out of the House, it’ll go over to the Senate; it has a lot of support there. It may get modified some, but I would say somewhere between October and December of this year, SECURE Act 2.0 will become the law.”
Many—but not all—of the provisions in the legislation could become effective in January 2022.
“Keep in mind this bill has a real chance, a very high probability of being enacted this year. So pay attention to it because it could create opportunities for you and your plan sponsor clients,” Reish said.
One of the most evident opportunities is for advisors working the small business/startup plan market, where SECURE 2.) could really enhance their offerings.
Reish explained the importance of how the legislation will encourage more small businesses to offer retirement plans.
“If you work with startup plans you really need to know about this. There is a really dramatic, significant increase in the tax credit of small plan startup costs,” Reish said.
He cited for example a company that has up to 50 employees starting a plan that could get 100% of the administrative costs covered up to $5,000 per year for 3 years.
“That’s significant. But it goes beyond that,” Reish continued. For employer contributions to these startup plans, they will credit the employer with up to $1,000 per participant for the first couple years and then a slightly reduced amount for the next 3 years.
“If you are in the startup plan market this is a huge deal. It’s basically going to make the plan free for the first few years, and very inexpensive for the next couple of years after that,” Reish said.
Another notable provision for advisors? The student loan match. “This is a great thing—if you have plan sponsor clients that hire a lot of young people out of college, this would be a great thing for you to be out there talking to them about, because if will make their plan more attractive and it might be a good recruitment tool for them.”
Also talked about MEPs for 403b plans, and various provisions including auto enrollment, long-term part time employees, student loans, Roth catchup contributions, RMD rules, annuities and more.
Beyond legislation, Reish touched on Department of Labor and SEC regulation and enforcement issues including the expanded definition of fiduciary advice, lifetime income illustrations and how to help plan sponsors answer inevitable participant questions about them, lawsuits and cybersecurity.
Registered Broadridge Fi360 Solutions Annual Conference 2021 attendees can access the full session on-demand.
MORE FROM BROADRIDGE Fi360 SOLUTIONS CONFERENCE:
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- 3 DC Plan Trends That Are Improving Participant Outcomes
- Why Guaranteed Income Matters Now
- What Fiduciaries Need to Know About ESG
- How to Fix the HSA ‘Blind Spot’
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Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
