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The Senate Finance Committee conducted a hearing today to consider the Enhancing American Retirement Now (EARN) Act. The bill was unanimously approved out of committee with one minor amendment. While text of the bill has not yet been made available, details of a summary released by the committee were previously announced. During the hearing, several other amendments were discussed and, while not included, many had broad support and could be included in the final full Senate version of the bill.

The Davis-Bacon Act (DBA) has played a major role in the construction industry for over 90 years. Passed in 1931, it has been described by the Supreme Court as a “minimum wage law designed for the benefit of construction workers.” The DBA generally requires payment of locally prevailing wages under direct federal contracts and for covered contractors and their subcontractors. The employer’s obligation can be met by paying the applicable prevailing wage entirely as cash wages or by a combination of cash wages and employer-provided, bona fide fringe benefits—including pension and health benefits.

The Senate Finance Committee has released an outline of its version of proposed retirement reform on the heels of passage of the Rise & Shine Act out of the Senate Health, Education, Labor and Pension (HELP) committee last week. A summary of the Enhancing American Retirement Now (EARN) Act released by the committee provides a brief description of each provision.

The IRS has issued Revenue Procedure (Rev. Proc.) 2022-28, which updates Rev. Proc. 2022-3, on whether the IRS will issue letter rulings or determination letters. The IRS will no longer issue letter rulings on whether an employer reversion of cash and the fair market value of other property received from a qualified plan occurs in connection with a spin-off/termination transaction that involved excess assets. For this Revenue Procedure, a “spin-off/termination transaction that involves excess assets” is defined as a transaction in which:

Representatives Linda T. Sánchez (D-CA) and Darin LaHood (R-IL) introduced the Starter-K Act, legislation intending to expand access to retirement savings for more Americans. Companion legislation was introduced in the Senate by Senators John Barrasso (R-WY) and Tom Carper (D-DE).

Senators Tim Scott (R-SC) and Sherrod Brown (D-OH) have introduced the Advancing Auto Portability Act of 2022, aimed at reducing retirement “leakage” by allowing for automatic rollovers of certain accounts to follow workers to another employer plan.

Senators Richard Burr (R-NC) and Bob Casey (D-PA) have introduced the College Savings Recovery Act, to allow families to transfer unused funds in their college savings 529 accounts into a Roth IRA. The College Savings Recovery Act was originally included as part of Senator Burr’s Boost Savings for College Act proposed in 2017.

Effective June 15, 2022, the Federal Prime interest rate increased from 4.00% to 4.75%. The Prime interest rate is largely determined by the federal funds rate, as set by the Federal Reserve’s Federal Open Market Committee (FOMC). As Department of Labor regulations require a retirement plan loan interest rate to be comparable to interest rates charged by entities that are in the business of lending money in similar circumstances, plan sponsors typically use a benchmark such as the Prime rate to set the interest rate on plan loans.

The next FOMC meeting is scheduled for July 26-27, 2022.

The Senate Health, Education, Labor and Pension (HELP) Committee unanimously passed out of committee S.4353 the Retirement Improvement and Savings Enhancement to Supplemental Healthy Investments for the Nest Egg (RISE & SHINE) Act (previously announced), with two amendments.

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.