“As I indicated in my LinkedIn post, there’s some good news and some bad news,” American Retirement Association (ARA) CEO Brian Graff said when asked about retirement plan provisions stripped from the (now) $1.75 trillion retirement reconciliation bill package. “The good news is that the [backdoor] Roth stuff is out, but we are definitely disappointed that the coverage expansion provisions were not included.”
He chalked it up to the political process in Washington, D.C., and while disappointed, he emphasized that “This story is not over.”
“Whenever you do major initiatives like this, it’s very common to have fits and starts,” he added. “The good news is that because we’ve gone through this process, we’ve educated a lot of policymakers about No. 1 that there’s a coverage challenge that’s significant in this country and No. 2, that we have a way to solve it that works. So, this is by no means the end of the story” for the retirement reconciliation bill.
He said we would prefer it happened faster, but it’s still a “when proposition, not an if.” The states will continue to add coverage mandates, with about a half dozen additional states expected to address coverage next year.
“I think it could surface again next year, frankly, as part of a bipartisan effort in SECURE 2.0,” he concluded. “I think now that we’ve really teed up the coverage issues, I think it’s quite likely there’ll be more stuff on coverage being considered as part of that process.”
Had the provisions remained in the retirement reconciliation bill, the impact would be enormous. At the NAPA 401(k) Summit in September, Graff cited Employee Benefit Research Institute data developed at the ARA’s request that found $7 trillion in new assets would flow into retirement plans over the next decade. He added that it would come from 625,000 new plans and 60 million new participants, citing Judy Xanthopoulos, Ph.D., with Quantria Strategies.
ARA said the retirement provisions were still in the mix until as recently as Wednesday night. The White House said in a Thursday statement detailing the Build Back Better framework that the scaled-down (from $3.5 trillion to $1.75 trillion) retirement reconciliation bill is “fully paid for” with tax increases on corporations, millionaires, and billionaires, and stepped-up enforcement against wealthy tax cheats. It also reiterates its often-mentioned stipulation that no one making under $400,000 “will pay a penny more in taxes.”
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