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State of the State Houses

By Joseph Caruso • March 26, 2018 • 0 Comments
State of the State Houses is an occasional feature that provides the status of legislation before state legislatures relevant to NTSA members.

Open Provider Access

Iowa. HF 569 passed easily in 2017, potentially opening the Iowa Retirement Investors Club (RIC) 403(b) program to as many as 30 providers.

Status: The Retirement Investors’ Club (RIC) and the Department of Administrative Services (DAS), which oversees the program, recently concluded their invitation to qualify (ITQ) process for new providers. Effective July 1, 2018, the following NTSA partners can offer their services in the state: GWN, EFS, AXA Equitable, Security Benefit, and National Life Group.

Oklahoma. OK SB 1056 This bill would allow the Oklahoma Teachers’ Retirement Systems Board of Trustees to terminate the Tax-Sheltered Annuity Program provided it is done in a manner consistent with federal tax law and which minimizes financial harm to participants in the program.

Status: The state Senate passed the bill on March 15.

Pension Reform

Kentucky. KY SB 1 creates a hybrid cash balance plan for teachers and cuts teachers’ cost of living adjustment among other provisions.

Status: The bill was up for a vote in the state Senate March 23, but it failed to pass and was sent back to committee. While there are few legislative days left in the session, the bill is not yet dead.

Standard of Care/Disclosure

Maryland. On March 19, the Financial Consumer Protection Act of 2018 (MD SB 1068) passed out of the Maryland Senate Finance Committee favorably with amendments just a week after the companion bill (MD HB 1634) successfully passed through the House of Delegates with similar modifications.

As initially drafted, the Financial Consumer Protection Act of 2018 would have created a fiduciary duty for broker-dealers, insurance agents, and investment advisers to act ‘primarily for the benefit of its clients.’ Not only would this provision have further complicated the regulatory burden for firms and professionals alike, but the fiduciary standard it would have established could have resulted in a preemption conflict with ERISA.

In early March, the American Retirement Association government affairs team reached out to the lead sponsor of SB 1068, Sen. Jim Rosapepe (D), to communicate its concerns regarding preemption. Rosapepe subsequently referred us to the Office of the Maryland Attorney General with whom we have arranged a meeting to further communicate our position. Those concerns were heard — the Senate version of the bill now no longer includes the fiduciary obligation and now directs the Maryland Financial Consumer Protection Commission to study:

1. the DOL rule and any Securities and Exchange Commission actions in addressing conflicts of interest of broker-dealers offering of investment advice by aligning the standard of care for broker-dealers with that of the fiduciary duty of investment advisers; and
2. changes to state law to provide the protection intended by the U.S. Department of Labor conflicts of interest rule addressing fiduciary duty standards of care.

The state Senate passed MD SB 1068 on March 21; the bill is now before the House Rules and Executive Nominations Committee.


RESA. Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) have reintroduced the Retirement Enhancement and Savings Act (RESA). RESA provides for pooled employer plans (PEP) in the form of either single Internal Revenue Code Section 401(a) individual account plans with tax-exempt trusts or a plan of Code Section 408 IRAs. The PEP would require designation of a pooled plan provider to act as an ERISA 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 would improve the existing safe harbor 401(k) plan design.

Status: Congress passed a $1.3 trillion omnibus spending bill to fund the government, and President Trump signed it into law. Notably, the measure did not include the bipartisan Retirement Enhancement and Savings Act.

Joseph A. Caruso, III, JD, MSPPM, is Government Affairs Counsel for the American Retirement Association.

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