While riders prohibiting the Department of Labor's proposed fiduciary rule from being finalized were conspicuously absent from end-of-year appropriations and tax extender bills, federal retirement policy was affected in several less dramatic ways.
The tax extender, or Protecting Americans from Tax Hikes Act of 2015, extends the charitable donations that can be made from IRAs by account holders after they hit required minimum distribution age (70 ½).
The PATH Act makes permanent qualified charitable write-offs from IRAs of up to $100,000. That exclusion was originally enacted in 2006.
A provision in the tax-extender law also allows a taxpayer to roll over money from an employer-sponsored plan into a SIMPLE IRA.
Prior to the new provision, a SIMPLE IRA could only take rollovers from a SIMPLE retirement plan. SIMPLE IRA plans are available to businesses with 100 or fewer employees that don't already sponsor a plan.
The low-cost option relieves small businesses of many of the administrative burdens associated with sponsoring a plan. In a SIMPLE IRA plan, sponsors make a non-elective 2 percent annual deferral to all participants' accounts, or a 3 percent match for those employees that elect to participate.
In allowing rollovers from other defined contribution plans, the provision could facilitate greater workforce mobility from large employer to small employers.
The PATH Act also extends the Defending Public Safety Employees Retirement Act to include U.S. Capitol Police and Supreme Court Police to the list of federal, state and local law enforcement and first responders that can take tax and penalty-free withdrawals from retirement accounts at age 50.
Typically, participants in employer-sponsored plans incur a 10 percent tax on assets withdrawn before age 59½.
Assets in 529 college savings accounts can now be spent on technology—previously it was not a qualified expense for the tax-preferred savings option. Also, tuition refunds can qualify as contributions, so long as they are reinvested in a 529 account within 60 days.
And so-called Church Plans, which enjoy exemption from the Employee Retirement Income Security Act, have new flexibility in which plans they associate with, and can now allow sponsors of the plans to implement automatic enrollment features.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
