LEXINGTON, Ky., Dec. 09, 2020 (GLOBE NEWSWIRE) -- Joshua Luskin, President of the National Association of Government Defined Contribution Administrators (NAGDCA), today presented testimony before the Senate Finance Subcommittee on Social Security, Pensions, and Family Policy at a hearing on the challenges to American retirement security. NAGDCA is the premier professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans.
During his testimony, Luskin highlighted four of NAGDCA’s six legislative priorities, noting that each has been incorporated into the Retirement Security and Savings Act.
First among these is NAGDCA’s key legislative priority:
Amend the IRC and the Securities Laws to permit 403(b) plans to invest in collective investment trusts (CITs).
“NAGDCA members brought this proposal to the organization and pushed for it to be a priority because of the potential benefits for 403(b) participants. Currently participants in 401(a), 401(k) and 457(b) plans now enjoy these benefits but 403(b)s are limited by statute to just mutual funds and annuity contracts,” stated Luskin. “DC plans that are able to invest in CITs can realize lower administrative costs, fees and greater flexibility. As just one example, a May 2020 paper by BlackRock estimated that lowering fees by just 20 basis point could result in more than a hundred million dollars in aggregate savings per year for these 403(b) plan participants. With participants having 10-, 20-, or 30-plus year careers, the time value of those savings could really positively impact people’s lives.”
Additionally, Luskin identified two other provisions NAGDCA has identified to make it easier for public sector defined contribution plan participants to consolidate their retirement assets:
Permit non-spousal beneficiaries to roll inherited IRA assets into their DC plan.
Allow participants with a Roth account in their DC plan to roll Roth IRA assets into their employer sponsored plan.
“Consolidation of retirement assets is a proven method to help participants maintain a unified investment strategy which help with better retirement outcomes. It also gives them the advantage of the generally lower costs and fees that they take advantage of in employer plans, as opposed to many retail IRAs,” Luskin continued.
Lastly, Luskin encouraged Congress to:
Clean up an anachronism in IRC Section 457(b), known as the “First Day of the Month” rule.
Luskin’s full written testimony may be accessed here.
The hearing—“Investigating Challenges to American Retirement Security”—included statements from Subcommittee Chairman Rob Portman (R-OH) and Subcommittee Ranking Member Sherrod Brown (D-OH). In addition to NAGDCA President Luskin, those who provided testimony at the hearing are:
Scott Barr, Financial Advisor - Edward Jones
Michael P. Kreps, Principal - Groom Law Group
Eric Stevenson, President, Retirement Plans – Nationwide
Recording of the hearing is available here.
NAGDCA members oversee plans for 49 state and territorial governmental entities and 132 local government entities, including counties, cities, public safety agencies, school districts, and utilities. NAGDCA plan sponsors administer deferred compensation and defined contributions plans, including 457s, 401(k), 401(a), and 403(b) plans.
“On behalf of NAGDCA, we sincerely thank Chairman Portman and Ranking Member Brown, and the Members of the Subcommittee, for holding this important hearing to explore ways to improve Federal law that can create greater benefits for our plan participants, and for the opportunity to share some of NAGDCA’s ideas about how to improve the DC retirement system. We look forward to continuing to work together to support changes, like the proposals we submitted, which will result in better retirement outcomes for so many people,” Luskin concluded.
About NAGDCA
NAGDCA provides education, information, and training in all aspects of public plan administration to support members in creating plans that enable secure retirement outcomes for their participants. To encourage a grassroots movement for societal change around retirement, NAGDCA conceived and introduced National Retirement Security Week to Congress. Resolution for the creation of National Retirement Security Week—now National Retirement Security Month—was passed by the Senate in 2006 and annually receives unanimous bipartisan resolution supporting its goals and ideals. To learn more about NAGDCA, visit https://www.nagdca.org/.