Tax incentives for retirement plan sponsors and participants could change once Republicans take control of the 114th Congress in 2015. Plus, money managers could be affected if the new Congress revisits much-criticized financial regulation.
The dramatic election results of Nov. 4 gave Republicans control of both houses of Congress for the first time since 2006. But their Senate majority of 52 confirmed seats won't be enough to run roughshod over other legislators; Republicans still will have to work with Democrats to accomplish their agenda or avoid presidential vetoes.
Both incoming chairmen of key Senate committees — Lamar Alexander, R-Tenn., on the Senate Health, Education, Labor and Pensions Committee and Orrin Hatch, R-Utah, on the Senate Finance Committee — are known for their bipartisan approach. Mr. Alexander will replace retiring Chairman Tom Harkin, D-Iowa, while Mr. Hatch will replace Ron Wyden, D-Ore., who will become the ranking minority member of the committee.
Mr. Hatch has sponsored legislation to expand the use of multiple employer plans, allow public defined benefit pension funds to purchase private annuities, and create a “starter 401(k) plan” for small private-sector employers. Mr. Alexander does not have a track record on retirement issues.
“Sen. Hatch has been a major driver of a consensus in both chambers around certain common-sense enhancements to retirement plans,” said Derek Dorn, a partner in Washington law firm Davis & Harman LLP and former senior Senate tax aide whose clients include plan sponsors and service providers. “His perch atop the Finance Committee certainly creates a significant likelihood that they will move forward.”
Mr. Dorn said he expects to see continued efforts to advance retirement savings features like auto escalation and more generous safe harbors and a renewed focus on promoting multiple employer plans to expand retirement savings coverage.