Summary of Recent Enacted & Proposed Legislation Affecting Governmental 457(b) Plans

November 24, 2020

The SECURE Act and the CARES Act, two major pieces of retirement-related legislation, were passed into law over the past year. Additional legislation, known as the SECURE Act 2.0, has also recently been introduced and has garnered bi-partisan support. Plan sponsors will want to consider the impact of these changes on their plans. The tables below provide summaries of the current and proposed provisions that may impact 457(b) plans.

The SECURE Act Impact on Governmental Plans
Passed December 17, 2019

In 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act (“SECURE Act”). We have summarized below some of the key aspects of the bill that impact qualified governmental plans. The American Miners Act of 2019 was also passed alongside the SECURE act; this bill contains a critical provision that applies specifically to 457(b) plans.

 
 
The CARES Act Impact on Governmental Plans
Passed March 25, 2020

In March 2020, congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) Act. The CARES Act includes several provisions relevant to qualified employer-sponsored retirement plans. We have summarized below some of the key aspects of the bill that impact qualified governmental plans.

 
 
The Securing a Strong Retirement Act of 2020, AKA the Secure Act 2.0
Proposed Legislation

We continue to monitor legislation developments and proposals, including a bill recently introduced in October 2020, entitled the Securing a Strong Retirement Act of 2020. This new bi-partisan legislation builds on the SECURE Act and has been referred to as the SECURE Act 2.0. Below is a summary of the SECURE Act 2.0 provisions that, if passed, could potentially impact qualified governmental plans.

 
 
Sources:
https://www.groom.com/resources/secure-act-impacts-distributions-under-governmental-plans-and-other-areas-affecting-plan-administration/
https://www.benefitspro.com/2020/04/27/secure-act-how-does-it-affect-403b-and-governmental-457b-plans/
https://www.nagdca.org/cares-act-analysis/
https://waysandmeans.house.gov/sites/democrats.waysandmeans.house.gov/files/documents/2.0Sectionbysection_final.pdf