State House Update
State House Update is an occasional feature that provides the status of legislation before state legislatures relevant to NTSA members.Pension ReformKentucky.
Kentucky Senate Bill 1
would create a hybrid cash balance plan for teachers and cuts teachers’ cost of living adjustment among other provisions. The bill would replace the current defined benefit plan option with a hybrid cash balance plan — the contribution amount is equal to that of current DB participants. The bill also would cut teacher benefits by reducing the annual cost-of-living adjustment from 1.5% to 1%. SB 1 contains significant changes from the initial pension reform proposal released in October of 2017. SB 1 would not force any current or future state employees or teachers into a DC (401(k)-style) retirement plan.Status:
The bill is currently making its way through the Senate.
Open Provider Access
Tennessee. SB 2016 would transfer the administration of 403(b) plans for employees of institutions of higher education from the Chancellor of the Tennessee Board of Regents (TBR) and the president of the University of Tennessee (UT), to the Tennessee Consolidated Retirement System (TCRS). It would delete:
- the limit of three companies from which the Optional Retirement Plan for Higher Education (ORPHE) may purchase investment products; and
- certain limits on when a separated employee may withdraw money accumulated in a retirement account and deletes certain limits on the amount of such withdrawal.
The bill was sent to Gov. Bill Haslam (R) on March 8 for his signature.Newly IntroducedFederal Government.
On March 8, Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) reintroduced the Retirement Enhancement and Savings Act (RESA). RESA provides for pooled employer plans (PEP) in the form of either single Section 401(a) individual account plans with tax-exempt trusts or a plan of Internal Revenue Code Section 408 IRAs. The PEP would require designation of a pooled plan provider to act as an ERISA Section 3(16) fiduciary plan administrator. The bill also provides for new small business incentives. Specifically, it would create a tax credit to encourage incorporation of automatic enrollment into the plan design of new and existing plans as well as increases the previously existing small employer pension start-up credit. RESA also would increase the time allotted to decide whether or not to adopt a qualified retirement plan and it improves the existing safe harbor 401(k) plan design.Joseph A. Caruso, III, JD, MSPPM, is Government Affairs Counsel for the American Retirement Association.