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Washington casts uncertainty on retirement strategies

President Donald Trump
Donald Trump’s election as president has created lots of uncertainty around existing and proposed regulations.

Even as speakers at Pensions & Investments' East Coast Defined Contribution Conference discussed different strategies to bolster retirement security, they were reminded of the uncertainty in Washington that could affect their plans.

Obama administration regulations that were proposed but not enacted “may be on ice,” said Geoffrey Manville, a Washington-based principal, government relations for Mercer LLC, discussing the Trump administration's stated approach to reducing new rules and reviewing existing ones.

For example, changes in the Department of Labor's Form 5500, a proposal for which public comments have been made, “won't go anywhere for some time,” he said during a March 21 keynote address. “Any guidance (on other subjects) that is not final is subject to rejection.”

Of course, the big issue is the fiduciary rule, whose applicability date has been extended from the original date of April 10 until June 9, at which point the DOL must decide whether to revise, rescind or retain the regulation. “I would be surprised if they rescind the rule entirely,” he said.

The extended deadline allows for public comment to determine if the rule would harm investors, cause disruption within the retirement services industry, cause an increase in litigation and/or raise the cost of retirement services, according to a memorandum issued by President Donald Trump in February.

Mr. Manville said safe-harbor regulations allowing states and cities to offer automatic individual retirement accounts are “very much in jeopardy.”

In February, the U.S. House of Representatives approved resolutions blocking DOL safe-harbor rules for state and city sponsored private-sector retirement savings programs.

The Senate hasn't acted yet, although resolutions similar to those of the House to block “secure choice” programs were introduced in early March.

Another area of concern is what Mr. Manville identified as the retirement policy blueprint among GOP members in the House of Representatives. One item calls for options “for an effective and efficient overall approach to retirement savings,” according to a House task force report for the House Ways and Means Committee. Mr. Manville said this comment is a “veiled reference” to reducing tax incentives for retirement plans.

Another GOP goal is the elimination of so-called tax expenditures, such as the exclusion of employer-sponsored defined benefit and defined contribution plan contributions and earnings. “We are vulnerable,” Mr. Manville said. “We are a huge pot of money. I don't see how we get out of this unscathed.”