PLANSPONSOR - December 2021 - January 2022 - 8

RULES & REGULATIONS
from Mayer Brown. Nancy Ross, a partner
and co-chair of the firm's ERISA litigation
practice, and Jed Glickstein, counsel in
the firm's litigation and dispute resolution
practice, had submitted an amicus brief to
the Supreme Court in the case. They called
on the high court to answer-in favor of
Northwestern University and in support
of the 7th Circuit ruling-the question
of what qualifies as a plausible claim for
relief in DC plan excessive investment and
recordkeeping fee suits.
In sum, the attorneys say the questions
and argumentations coming from
the bench showed a preference for the
position of Northwestern University,
such that they themselves would " rather
be in [the school's] shoes than the plaintiffs'
shoes. " However, they noted that the
Supreme Court could still certainly rule
in a surprising or unexpected way and
that it has the leeway to either publish a
sweeping or a highly limited ruling, so
caution and patience are warranted. They
expect a ruling to be filed by late spring
2022, but even that timing is uncertain at
this juncture.
Natural Disasters and
No-Fee Withdrawals
Members of the House Ways and Means
Committee have introduced bipartisan
legislation that would allow survivors of
natural disasters to withdraw funds from
their retirement accounts for emergency
expenses without fees or penalties. U.S.
Representatives Mike Thompson, D-California,
and Mike Kelly, R-Pennsylvania,
say the Disaster Retirement Savings Act
of 2021 would allow natural disaster
victims to withdraw funds from their
retirement accounts to pay for emergency
costs and that the legislation is needed to
assist survivors. Congress often acts after
a disaster is declared to provide relief, but
not soon enough, and survivors are uncertain
when or if relief will be forthcoming,
say the bill's sponsors.
Under current law, natural disaster
survivors are subject to up to 20%
8
em er
withholding and 10% in tax penalties if
they draw from retirement funds to cover
emergency disaster costs. Survivors must
often wait for the IRS to act to access
funds without penalty. With the new
legislation, tax relief would be triggered
if the president issued a federal disaster
declaration.
The bill would
allow survivors
of natural
disasters to
access $100,000 of
retirement funds ...
without paying
fees or penalties.
The bill would allow survivors of
natural disasters to access $100,000
of retirement funds after a federally
declared disaster without paying fees or
penalties. Funds may be used to cover
costs including emergency housing and
may be repaid over three years.
A Wishlist Left Unfulfilled
The Retirement Improvement and
Savings Enhancement (RISE) Act (H.R.
5891) was introduced in early November
by the U.S. House Committee on Education
and Labor.
The RISE Act includes provisions
that have been introduced in separate
pieces of legislation, including the
Securing a Strong Retirement Act, often
referred to as " SECURE 2.0, " in a reference
to 2019's Setting Every Community
Up for Retirement Enhancement
(SECURE) Act. For its part, SECURE 2.0
was passed unanimously by the House
Ways and Means Committee in May, and
companion legislation has been introduced
in the Senate.
For much of this past year, the relative
flurry of retirement-plan-related legislative
activity had experts expressing hope
that much-needed progress was right
around the corner-that SECURE 2.0
and related legislation such as the RISE
Act will enable millions more workers to
build savings through employer-provided
retirement plans. For example, a key
feature of SECURE 2.0 is a mandatory
automatic enrollment provision for new
retirement plans; the bill also increases
a tax credit for small business owners to
encourage them to offer their employees
a retirement plan.
As recently as September, these
and other retirement-focused policies
featured prominently in the Democrats'
" Build Back Better " budget framework.
In fact, an early version of the budget
language dedicated the entire Subtitle
B section to retirement-related legislative
recommendations. Language in this
section of the draft would have generally
required small business employers to
offer their employees a retirement plan.
The early draft would also have set new,
higher limits on contribution ranges and
the amount of employees' earnings that
could ultimately be tax-deferred. Other
provisions would have required automatic
enrollment retirement plans to include
a protected lifetime income distribution
option for plan participants.
More recently, however, industry advocates'
hopes for such retirement reforms
being passed as part of the ongoing federal
budget negotiations have mostly been
dashed. After multiple rounds of revisions,
the current version of the budget legislation
includes none of the aforementioned
retirement-related provisions. Experts also
say it is more likely that reforms will be
made either via standalone legislation or
as part of a future omnibus bill that has
yet to take shape. -PS
For in-depth coverage of these topics and more, go to PLANSPONSOR.com/compliance.
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