Legislative updates

Senators Patty Murray (D-WA) and Richard Burr (R-NC), chair and ranking member of the Senate Health, Education, Labor and Pensions (HELP) committee respectively, have introduced the Retirement Improvement and Savings Enhancement to Supplemental Healthy Investments for the Nest Egg (RISE & SHINE) Act, the Senate HELP committee’s latest version of compiled retirement provisions. While the provisions included in this version of the bill remain substantially similar to the discussion draft version previously announced, some technical details have been changed or removed from select provisions.

Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) announced the “Lummis-Gillibrand Responsible Financial Innovation Act,” set to be introduced in the Senate. The Senators describe the bill in an accompanying press release as a “complete regulatory framework for digital assets.” Included within the many provisions of the bill is a requirement for the Government Accountability Office (GAO) to conduct a study and provide a report to Congress and the Secretaries of Treasury and Labor on benefits, risks, and barriers to retirement investing in digital assets.

Senators Patty Murray (D-WA) and Richard Burr (R-NC)—chair and ranking members of the Senate Health, Education, Labor and Pensions Committee respectively—have released a discussion draft of compiled retirement provisions from several bills into the Senate’s latest version of what has been coined SECURE Act 2.0. The RISE & SHINE Act shares some similarities to, and builds upon the Securing a Strong Retirement Act bill that passed the House in March.

Representative Byron Donalds (R-FL) and several Republican co-sponsors have introduced HR 7860, the Financial Freedom Act of 2022. This is companion legislation to S 4147 introduced earlier this month by Senator Tommy Tuberville (R-AL). The proposal would prohibit the Department of Labor (DOL) from restricting the types of investments that plan participants can choose through participant directed accounts and self-directed brokerage accounts. The bills are in response to regulatory guidance released by the DOL and announced in March.

Senator Dan Sullivan (R-AK), along with co-sponsors Pat Toomey (R-PA), Mike Crapo (R-ID) and Chuck Grassley (R-IA), have introduced S. 4241 the “Investor Democracy is Expected Act” or INDEX Act. The bill would require investment advisors of passively managed funds to vote proxies in accordance with the instructions of fund investors – not at the discretion of the adviser. The adviser would be responsible for passing through the proxies, collecting the instructions, and voting according to the investors’ wishes. With the exception of routine matters, the investment advisor cannot vote on the proportion of shares for which voting instructions were not received. The proposal provides for a safe harbor whereby investment advisors would not be in violation of duties by choosing not to solicit voting instructions or voting the particular proxy.

Senators Todd Young (R-IN), and Cory Booker (D-NJ) have introduced the Emergency Savings Act of 2022. The proposal would allow “pension-linked” savings accounts for participants of up to $2,500 (subject to cost-of-living adjustments) to be used for unexpected expenses. The accounts would be treated in the same manner as after-tax contributions, and plan sponsors could automatically enroll a participant with a compensation deferral percentage not to exceed three percent. The account can be invested as cash, in an interest-bearing deposit account, or an investment product designed to preserve principal and provide a reasonable rate of return—and is not subject to any unreasonable fees, restrictions, expenses or charges in connection with the account or withdrawals.

Senator John Kennedy (R-LA) has introduced S. 4265, the Inflation-Adjusted Education Investment Act. The proposal would increase the current limit on 529 plan distributions from $10,000 to $12,000. The bill would also make the new cap adjustable for inflation beginning in 2023.

Representative Mark DeSaulnier (D-CA) has introduced H.R. 7780, the “Mental Health Matters Act,” which strengthens behavioral health benefits in schools and also amends provisions of the Employee Retirement Income Security Act (ERISA).

Representative Mark DeSaulnier (D-CA) has introduced HR 7740 – the Employee and Retiree Access to Justice Act. The bill proposes to amend ERISA to provide that any mandatory predispute or coerced postdispute arbitration clause, class action waiver, representation waiver, or discretionary clause with respect to a plan is unenforceable. The bill would also amend ERISA to prohibit any such clause or waiver from being included in a plan document or other agreement with participants. A Senate companion bill was introduced by Senator Tina Smith (D-MN).

Representative DeSaulnier is the Chair of the House Subcommittee on Health, Employment, Labor and Pensions. Senator Smith is a member of the Senate Health, Education, Labor and Pensions Committee.

May 11, 2022 – Senator John Hickenlooper (D-CO) has introduced two retirement bills in the Senate. The Simplifying Small Business Retirement Savings Act, co-sponsored by Senator Susan Collins (R-ME), would require a group of plans filing a single Form 5500 under the SECURE Act to have an individual audit opinion for each plan that would otherwise be subject to an audit requirement. Additionally, the proposal would allow the designation of a fiduciary (other than an employer) to be responsible for collecting contributions to the plan in a pooled employer plan (PEP). The bill also directs the Secretary of Labor to conduct a study on PEPs.

The Incentivizing Small Business Retirement Savings Act would provide a tax credit for employer contributions of up to $1,000 per non-highly compensated employee, with a 2 percent reduction or phaseout of the credit for each employee that exceeds 50 employees. The credit would equal 100 percent in the first tax year and would be reduced by 25 percent each tax year for years 2-4.