FOR IMMEDIATE RELEASE
Response seeks clarification on the applicability to governmental plans of SECURE 2.0 Section 127 amending Code Section 402A permitting pension-lined emergency savings accounts
Lexington, KY, January 10, 2024—The National Association of Government Defined Contribution Administrators (NAGDCA) today announced that it has submitted a response to the December 6 release of a discussion draft of technical correction legislation to the SECURE 2.0 Act of 2022 (SECURE 2.0, Div. T, P.L. 117-328) The response was sent to members of the Senate Finance, House Ways and Means, Senate Health, Education, Labor and Pensions, and House Education and Labor committees.
NAGDCA is the premier professional association for plan administrators and services providers of government-sponsored defined contribution retirement plans. NAGDCA governmental members oversee plans for participants from 60 state and territorial government entities, and 146 local government entities, including counties, cities, public safety agencies, school districts, and utilities.
As stated in the letter authored by NAGDCA Executive Director Matt Petersen, “On behalf of our government members, we seek clarification on the applicability of SECURE 2.0 Section 127 to governmental plans. SECURE 2.0 Section 127 amends Code section 402A to permit employers to offer ‘pension-linked emergency savings accounts’ (PLESAs), provided the accounts are ‘established pursuant to section 801’ of ERISA. Congress clearly intended to permit governmental plans to establish PLESAs given the explicit references to 457(b) plans in the amendments to Code Section 402A. However, it would be helpful to include clarifying language in the statue to confirm that governmental plans can establish PLESAs that are consistent with ERISA section 801 without actually being subject to ERISA.”
The full letter may be accessed here.
Additionally, the letter requests governmental plan exemption from SECURE 2.0 Section 125 for the reasons outlined in NAGDCA’s letter to legal counsel at the U.S. Department of the Treasury and Internal Revenue Service in response to the Notice of Proposed Rulemaking: Long-Term, Part-Time Employee Rules for Cash or Deferred arrangements Under Section 401(k) (REG-104194-23). This letter may be accessed here.
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. Additionally, NAGDCA is a co-founder with the Employee Benefit Research Institute of the Public Retirement Research Lab, a retirement industry-sponsored collaborative effort of the Employee Benefit Research Institute. The PRRL mines data from the PRRL Database, the first-ever database specific to public sector plan- and participant-level defined contribution data, to produce research aimed at enhancing understanding of the design and utilization of public sector defined contribution retirement plans. NAGDCA also conceived National Retirement Security Week to encourage retirement saving among government workers. Through its efforts, National Retirement Security Week evolved into National Retirement Security Month, a national effort to inspire American employees to save adequately for a secure retirement that is observed throughout the retirement industry during the month of October. It has received bipartisan Senate resolution since its conception in 2006. To learn more about NAGDCA, visit https://www.nagdca.org/.
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