“Make an Impact,” the theme for the 2013 NAPA/ASPPA 401(k) summit that began yesterday in Las Vegas, may have sounded more like an exhortation to the nearly 1,400 pension professionals attending the event -- but an appeal that many appear to have every intention of acting upon. Threats to the 401(k) from Washington were chronicled in the opening session by ASPPA CEO Brian Graff and others.

But before attendees were briefed on that grim subject, they were informed by NAPA President Marcy Supovitz that NAPA membership now totals 4,100 individual members along with 82 corporate partners -- a dozen of which signed up in 2013. “We’re barely past our first birthday and we have become a powerhouse,” she said. 

Next year’s summit will strictly be sponsored by NAPA, offered by Supovitz as a sign of the organization’s coming into its own. 

“Policymakers have come to acknowledge NAPA’s role. They are coming to us for input,” she said. NAPA is planning an elite “fly-in forum” in the fall where attendees will be briefed by top IRS and Labor Department officials, as well as members of Congress. 

NAPA is also beginning to work on creating special learning opportunities for people just joining the world of pension professionals, according to Supovitz. 

She was followed by a dialog between Graff and an attorney for the Senate Health Education Labor and Pensions Committee who insisted on only being identified, for public consumption, as a “senate staffer.” 

How opposing political camps in Congress will navigate future budget milestones, such as an April 15 deadline for the Senate and the House to each pass a budget or else take pay cut, or the inevitable necessity of raising the debt ceiling again this summer, is unclear. But, Graff reported, “The tax-writing committees are hell-bent on tax reform.” Committees have been established to address different areas to “reform,” including retirement plans. 

Ideas that are percolating in Washington and could find their way into a tax reform plan include a Simpson-Bowles proposal to cap 401(k) contributions at $20,000; an Obama Administration proposal to limit the tax benefits of 401(k) contributions to a maximum 28% tax rate (i.e. deductions for taxpayers in higher brackets but be capped at that 28% level), and another proposal for a $2 million lifetime limit on 401(k) contributions. 

While that $2 million cap would not appear to directly affect many 401(k) participants, it could lead to plan terminations by business owners who reach that limit and then may consider terminating the plan on the basis, as Graff put it, that “I’m done. 

Graff noted that Congress has a long history of chipping away at the pension system for the sake of making budget numbers add up. “For a lot of the folks on the Hill and even the White House, it’s not a policy discussion. They’re just looking for money in the most politically expedient way,” he said 

The Senate staffer expressed sympathy for the challenge that Senators and Congressmen will face when attempting to balance the sacrifices that will need to be made on many fronts. “If the choice is between retirement plans, or cutting Medicare or food stamps, they’ve got difficult choices.” 

Graff made it clear that ASPPA and NAPA will keep the pressure on Congress and convey that there will be a political price to pay if Congress fails to balance those interests, citing the ongoing consumer-oriented “Save my 401(k)” campaign. Its call to Americans: “Tell Congress to Keep their Hands Off Your Retirement Savings.” 

Ending the session on a more hopeful note, the Senate staffer recounted HELP Committee Chairman Tom Harkin’s hopes, first expressed in an announcement last July following a long period of hearings and investigation, to restore the classic three-legged stool of retirement savings by:

1) Strengthening Social Security

2) Encouraging personal savings through 401(k) plans by facilitating competition (such as through fee disclosure) and “common sense ‘tweaks’ to improve innovation,” and

3) A push to rebuild pensions, possibly through a hybrid pension concept he endorsed called Universal, Secure and Adaptable (USA) Retirement Funds, a private portable pension plan available to all workers. The Funds would be privately run and professionally managed. 

“What’s really going on with proposals like Senator Harkin’s and others,” Graff said, “is real dissatisfaction with 401(k)s, concerns about access, coverage and lifetime income options.  It’s a call to us to really examine what we can do in the 401(K) space to improve retirement outcomes.“ 


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