President Donald Trump signed an executive order (EO) on August 31, 2018 aimed at giving Americans more time to keep their money in tax-deferred retirement accounts, allowing small organizations to band together to offer retirement plans, and reducing paperwork and administrative burdens that might prevent organizations from offering retirement savings plans.
The Executive Order instructs the Treasury Department to review its rules for Required Minimum Distributions (RMD) from retirement plans and Individual Retirement Accounts (IRAs). The current minimum distribution rules require retirees to withdraw a percentage of their retirement savings each year starting at age 70½.
The EO also instructs the Department of Labor (DOL) and the Treasury to consider issuing regulations that would make it easier for small employers to jointly offer retirement plans through so-called multiple employer plans (“MEPs”). Current regulations allow for MEPs, but certain regulatory changes could increase the availability of MEPs in the marketplace.
The DOL is also ordered to consider ways to reduce paperwork and administrative burdens that might prevent organizations from offering retirement savings plans. This includes modernizing rules related to electronic delivery (“e-delivery”) of retirement plan documents and disclosures.
While the EO is a positive step toward increasing access to retirement savings plans and helping retirees better manage their savings to accommodate longer life expectancies, it is unclear at this time what regulatory changes will result from the directive. In addition, it is important to note that there are several legislative initiatives underway that address issues discussed in the EO. Congress is expected to continue to pursue these bills.
As a leading provider of retirement security, TIAA plays a key role in advocating for solutions to enhance retirement preparedness and overall financial security in Washington, D.C. and the state capitals. We will remain engaged with DOL and Treasury as they review the regulations outlined in the EO, and offer our unique perspective and expertise on how changes to these rules could enhance retirement security. TIAA also will continue to advocate for legislation that would holistically address the current retirement system to ensure individuals are saving in employer-sponsored plans that provide products on their plan menus that provide guaranteed income in retirement.
Should you have questions, please reach out to your Consultant Relations Director at 844-639-8422.