Will the Lame Duck Produce Any Retirement Legislation?

Congress faces a government funding deadline, while a bipartisan group of lawmakers push for emergency COVID-19 relief, but it’s not clear whether there will be an opening for retirement relief.  

Time is running short, as Congress is facing a Dec. 11 deadline to approve either a catch-all funding bill that funds the government for the remainder of fiscal year 2021 (which began Oct. 1) or another temporary funding resolution. The government funding bill is one of the only remaining items that the lawmakers must address this year, and typically, several additional measures are added to these year-end funding bills.  

In the meantime, the months-long stalemate over a follow-up COVID-19 relief package that has embroiled the House and Senate leadership, along with the Trump administration, continues. But a bipartisan and bicameral group of lawmakers released a $908 billion framework in an effort to break the logjam. That seemed to catch the attention of congressional leaders. Shortly after the bipartisan framework was released, Sen. Majority Leader Mitch McConnell (R-KY) released a proposal. And Sen. Minority Leader Chuck Schumer (D-NY) and House Speaker Nancy Pelosi (D-CA) reportedly floated a proposal earlier this week with McConnell and Treasury Secretary Steve Mnuchin. 

While these proposals do not appear to include specific retirement policy proposals, it suggests that party leaders may come back to the table to work on a broader package. There are a few retirement policy items that could be added—although some have a higher probability compared to others.  

SECURE Act 2.0

The Securing a Strong Retirement Act (SSRA), dubbed “SECURE 2.0,” was introduced recently by House Ways & Means Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX) and would build on the SECURE Act that was part of the 2019 year-end funding bill. At this late stage, it’s doubtful this bill will be added to a year-end package, but Chairman Neal has pledged to pursue it in the next Congress if it is not addressed in the lame duck session. 

Paycheck Protection Program Extension

With additional funding included in the various packages, it’s possible that an extension of PPP funding with the option to have a second round of loans could be included. To date, changes to the PPP have been caught up in the broader stalemate over an additional COVID-19 relief package. 

Paycheck Protection Deductibility

Clarifying that expenses paid or incurred with proceeds from forgiven PPP loans under the CARES Act that are not included in gross income do not result in a denial of any deduction is an area that has bipartisan support and could end up in a year-end package.  
 

CARES Act Clarifications

Several retirement provisions contained in the House-passed HEROES Act and the Senate’s HEALS Act package would build on and/or clarify certain provisions contained in the CARES Act, such as:

• providing additional relief from the required minimum distribution rules for DC plans and IRAs;
• waiving the 60-day and once-per-year limitation rules in the case of rollovers of otherwise RMDs for 2019 and 2020;
• clarifying that eligible retirement plans can rely on an employee’s certification for purposes of determining whether an employee is eligible for the special loan rules under the CARES Act; 
• clarifying that the CARES Act’s special distribution and loan rules also apply to money purchase plans;
• providing extended amortization for single employer plans and extending pension funding stabilization percentages for single employer plans; and 
• modifying the special rules for minimum funding standards for community newspaper plans.

While it’s not certain that they will be included, these changes have received bipartisan support and could end up in a final package. Note also that the last day to take advantage of the expanded CARES Act loan provision was Sept. 22, while the last day to take a Coronavirus-related distribution (CRD) is Dec. 31, 2020. 

Overall, the various competing proposals suggest that lawmakers want to reach a deal. And Congress must approve a government funding bill, and these bills usually include additional riders. The takeaway is that lawmakers do not want to leave town without acting on additional, emergency COVID-19 relief; although it’s a long shot, that could include some retirement-related changes.