NEC Financial Services Priorities Included in Year-End Spending Bill
December 19, 2019
The House of Representatives on Tuesday passed legislation designed to fund the government for the remainder of fiscal year 2020. That bill – the Fiscal Year 2020 Consolidated Appropriations Act (H.R. 1865) – passed by a vote of 297 to 120. Every member of the New England House delegation voted in favor of the bill. The Senate voted 71 to 23 on H.R. 1865 earlier this afternoon, and the President is expected to sign it into law either later today or tomorrow. Besides funding elements of the U.S. government, both the SECURE Act and a seven year reauthorization of TRIA were included in the funding package.
The SECURE Act and the seven-year reauthorization of the Terrorism Risk Insurance Act (TRIA) were two issues that the Committee has strongly supported throughout the year. Thank you to all who helped with drafting our letters of support to Congress and brought these issues up at New England Council events during the year, your participation has clearly made a difference in the work that we do.
A summary of the appropriations bill can be found, here.
The Setting Every Community Up for Retirement Enhancement (SECURE) Act, passed by the House in May, contains several compliance changes for 401(k)-type defined contribution plans and to defined-benefit pension plans. The SECURE Act would, among other changes:
Increase the business tax credit for plan startup costs to make setting up 401(k) plans more affordable for small businesses.
Allow unaffiliated employees to offer their workers a 401(k) through a multiple employer plan (MEP), with eased compliance requirements compared to current MEPs.
Delay required retirement distributions from 401(k) plans to age 72, up from age 70 1/2.
Allow automatic-enrollment safe-harbor 401(k) plans to increase the cap on automatically raising payroll contributions.
Create a 401(k) safe harbor from liability for offering in-plan annuities.
Reduce annual testing requirements on “frozen” defined-benefit pension plans closed to new hires.
Most of the SECURE Act’s provisions won’t take effect until January 2021. You can find a summary of the SECURE Act, here.
Terrorism Risk Insurance Act (TRIA)
The appropriations package includes a seven-year extension of the Terrorism Risk Insurance Program. The seven-year extension provide certainty and stability for insurers, policyholders, and the government in any case of a future terrorist attack similar to September 11th. Absent a reauthorization of TRIA, it is likely the country will see a repeat of what occurred in 2001, with many insurers no longer offering terrorism risk insurance coverage, or offering it only at significantly higher prices.
This addition ensures that TRIA does not expire at the end of 2020, and provides the long-term reauthorization of the program preferred by many legislators as well as New England Council members.
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