The Biden administration has pulled out of work on new rules that would allow employer pension plans to contribute to retirement savings plans based on their workers’ student loan payments.
“It kind of fell into the immediate category of ‘we’re working hard’,” William Evans, legal adviser in the Treasury Department’s Office of the Employee Benefits Tax Advisory Board, said Tuesday at the 2021 Fall Tax Meeting. ‘American Bar Association. A lot of work had to be done to implement the provisions of the Establishment of Every Community for the Improvement of Retirement (SECURE) law of 2019, taking time and resources, he said. .
The SECURE Act made major changes to retirement savings plans, including increasing the age at which required minimum distributions must be raised to 72 from 70 1/2 and reducing the ability to expand IRA distributions. inherited for most unmarried beneficiaries during their lifetime. expectation at 10 years.
“There has been a lot of interest from Congress in the topic, and there is some idea to see what is happening on the student loan legislative front,” Evans said.
There has been a push to allow student loan payments to count when employers contribute to defined contribution plans like 401 (k) s. Young adults contribute less to retirement plans, and many believe student loan payments are keeping them from doing so.
In 2018, the Internal Revenue Service issued a private letter decision allow an anonymous company to modify its 401 (k) plan so that employees who have agreed to contribute at least 2% of their salary to student loans are eligible to receive employer contributions of 5% of their salary.
The government had been pushing to extend this private letter decision “to be more reliable” and to address non-discrimination issues, Evans said.
Implementation of the SECURE law
The administration is “working hard” on regulations that would implement SECURE Sections 102 and 103 so that 401 (k) plans that use non-voluntary employer contributions as “safe harbor” contributions no longer have annual notice requirements, Evans said. . Safe harbors are legal provisions that specify conduct that is deemed not to violate regulations.
The IRS is also working on a draft regulation on how the IRS Notice 2016-16 the rules for mid-year changes to 401 (k) plans would interact with the SECURE law, Evans said.
In addition, the IRS is working on a “path to compliance” on how to meet distribution requirements if pension plan members cannot be found, Evans said.
“We’re making progress there and hope to be able to provide some helpful advice,” Evans said. “We recognize that there are issues with the type of hold and report, especially for replacement checks, or when the plan administrator finds out that a check was sent to the wrong address,” did he declare.