Regulations concerning fee disclosure and participant advice, as well as the impending re-definition of fiduciary coming from the Department of Labor, are designed to put downward pressure on fees and to create an interest in more levelized fee arrangements, which will help retirement plan participants receive better returns on their investments, Wagner said.
The recent Internal Revenue Service exemption for longevity annuities in defined contribution plans from onerous death benefit rules, as well as efforts to relax required minimum distribution (RMD) rules are government efforts that would facilitate decumulation planning, she said.
However, when Congress considers tax reform to help lower the nation’s debt, retirement plans also enter the discussion, and not in a good way. According to Wagner, in the government’s view, favorable tax treatment for retirement plans will result in $361 billion in foregone revenue from 2011 to 2015. “Plan limitations can, have and will change, depending on what society needs,” Wagner warned. “And they can be lowered to reduce the national debt.” Not only are lawmakers talking about lowering amounts that receive favorable tax treatment, but they have also considered making contributions to retirement plans immediately taxable.
These discussions have sparked lobbying from industry groups that represent plan service providers, plan sponsors and investment providers, who all say reducing tax incentives to save for retirement will reduce plan offerings and contributions by employees at all wage levels, Wagner said. “It will reduce the role of employers in the retirement industry,” she concluded.