The Treasury Department will soon release guidance that would make it easier for plan sponsors to conduct rollovers in an effort to lessen "leakage."
It also is planning to issue final regulations on hybrid plans such as cash-balance plans.
According to Mark Iwry, Treasury's deputy assistant secretary for retirement and health policy, the coming guidance on rollovers "would make it easier for a plan sponsor to accept a rollover from other qualified plans and IRAs."
Recommended For You
Iwry, speaking Tuesday at the American Society of Pension Professionals and Actuaries' annual conference at National Harbor, Md., said the move would help make "leakage" from retirement plans "less likely."
A recent State of the Retirement Industry report by New York Life found "leakage" from 401(k)s to be a major problem.
The report found that the average contribution rate for a participant who takes out a loan from their 401(k) is 5.63 percent, compared with 7.23 percent for participants without loans. Also, more than two-thirds of participants with an outstanding loan balance who leave their employer will take a cash distribution from their retirement plan rather than paying back the loan. Both are characterized as "leakage" from plans.
A Principal Financial spokesperson said that the company "supports efforts to make it easier for plan sponsors to accept rollovers and for participants to roll over their retirement assets into the new employer-sponsored plan," and the company "looks forward to the opportunity to review and provide comment on any proposed regulation."
"At long last," Iwry said at the ASPPA event, Treasury plans to issue its final regulations on hybrid plans, such as "cash-balance pension plans and similar arrangements," which "have taken longer than we'd hoped."
Judy Miller, director of Retirement Policy at ASPPA, said in an email that the final hybrid regulations would address "restrictions on qualifying for 'whipsaw' relief, a special testing rule for accruals for plans with variable interest rates that could be negative, a limited exception to the rules for conversions from traditional to cash balance plans, and rules for crediting interest."
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
