Compliance September 12, 2022

Senator Calls for Confirmation Vote on Assistant Secretary of Labor Nominee

Senator Patty Murray takes the 48th anniversary of ERISA to emphasize the importance of having a proper secretary to oversee EBSA.

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On September 6, Senator Patty Murray, D-Washington, published a press release and accompanying resolution calling for the confirmation of Lisa Gomez as assistant secretary of labor for the Employee Benefits Security Administration and emphasizing the importance of Employee Retirement Income Security Act

Murray, chair of the Senate Health, Education, Labor and Education Committee, noted in the release that approximately 142 million employees are covered by ERISA, as well as 730,000 employer-sponsored plans.

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Gomez was nominated in July 2021, and failed a confirmation vote on June 8 of this year because Vice President Kamala Harris was not present in the chamber to break the 50-50 tie.

Ali Khawar has been acting assistant secretary since March 2021. David Levine of Groom Law explains that there is no limit on Khawar’s authority relative to what Gomez’s will be if she is confirmed. He says “they can keep moving forward,” and notes that “EBSA is pretty active.”

There has been some Republican opposition to Gomez’s confirmation. Ranking committee member Senator Richard Burr, R-North Carolina, did not offer specific comment on his opposition during Gomez’s confirmation hearing before the committee.

Senator Tommy Tuberville, R-Alabama, hinted at one potential source of Republican opposition during the hearing when he asked, “Do you agree that a fiduciary should always act in the best economic interests of investors and work to maximize the investor’s total return on a risk-adjusted basis?”

Although Tuberville did not mention environmental, social and governance investments specifically, he is from a state whose attorney general was among the 19 who recently issued a joint letter to Blackrock criticizing the firm for using state pension fund assets in ESG investments. The letter asserts that ESG does not maximize returns on investment and does not satisfy the firm’s fiduciary duty, and instead only advances its “climate agenda.”

Tuberville’s office could not be reached for comment.

Lisa Gomez has been endorsed by the AFL-CIO, a federation of unions that traditionally supports Democrats and endorsed Joe Biden for president in 2020.

Ryan Meyers, a spokesperson with Senator Murray’s office, says there is no timetable for another floor vote on Lisa Gomez’s nomination. However, Dan Zielinski of the Insured Retirement Institute says he expects Gomez to be confirmed by the end of the year.

Compliance September 9, 2022

Senate Finance Committee Proposes Final Text for EARN Act

The fully amended bill clarifies the Senate's position on retirement reform, as the Senate and House approach a final deal expected late this year.

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Senate Finance Committee Chairman Ron Wyden, D-Oregon, and Ranking Member Senator Mike Crapo, R-Idaho, introduced the fully amended legislative text of the Enhancing American Retirement Now Act on Thursday. The EARN Act had previously passed in the committee 28-0 in June.

Dan Zielinski, a spokesperson at the Insured Retirement Institute, explains, “There is no substantive difference between the text that was released yesterday and what the Finance Committee approved in June. It’s conceivable that there were a few technical tweaks but nothing that would alter the substance.”

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He also says that he expects a successful vote on a final bill sometime between Election Day and the end of the year.

The EARN Act is accompanied by the Retirement Improvement and Savings Enhancement to Supplement Healthy Investments for the Nest Egg Act, aka the RISE and SHINE Act, which is moving through the Senate Committee on Health, Education, Labor and Pensions.

In March, the full House of Representatives passed their own companion bill, the Securing a Strong Retirement Act, by a near unanimous vote. The two Senate bills are expected to be the starting point for negotiations and conciliations with the House version.

In its current form, the EARN Act broadly reforms American retirement plans. The changes the bill would make include:

  • Employers would be permitted to match student loan payments as if they were 401(k) contributions to an employer-sponsored plan. This would take effect after 2023.
  • Previously, employers with a 401(k) plan had to enroll any employee who worked 500 hours a year for three consecutive years. This would be reduced to two years.
  • Current law places a 10% tax on early withdrawals. Under the EARN Act, one could withdraw up to $1,000 per year for qualifying emergencies without a tax penalty. One would have to wait up to three years before doing so again, unless the withdrawn amount is repaid early.
  • Americans age 60 to 63 could contribute up to $10,000 over the IRS cap.
  • Survivors of domestic abuse could withdraw up to $10,000 or 50% of their account total, whichever is less, without incurring the 10% tax.
  • Required distributions would not start until age 75, as opposed to 72 under current law. However, this provision does not take effect until 2031.
  • The current tax credit for individual contributions to retirement plans could be received as a government contribution to the plan, instead of cash as part of a tax return, of up to 50% of the individual’s contribution or $2,000, whichever is greater.
  • An eligible employer of 100 or fewer employees would receive a tax credit equal to their contributions to an employer-sponsored plan, but only up to the first 2% of the employee’s contributions and for their first five years of employment.

“I’m proud that we are making significant progress for millions of low- and middle-income workers, who are far less likely to have adequate retirement savings,” said Wyden in a press release. “These workers frequently have physical, demanding jobs, and often depend solely on their Social Security income. Too often, they simply do not have resources to last through retirement. Under our reforms, many more workers would access resources for retirement and see meaningful federal retirement contributions year after year.”

Crapo also said in a press release, “The EARN Act expands opportunities for Americans to increase their retirement savings and improves workers’ long-term financial well-being.”

It is unclear what precisely will happen next, but both expert opinion and these reforms’ broad support suggest that a final bill will be passed in the coming months.

An executive summary is available here.

The full text is available here.

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