Pending Legislation Could Affect Employee Benefit Plans

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Since the 112th Congress commenced at the beginning of this year, multiple bills have been introduced that, if enacted, would affect employee benefit plans and executive compensation. Some of this proposed legislation, which is currently in committee, is highlighted below.

401(k) Plans: Two pieces of legislation affecting 401(k) plan are pending. The first bill (found here) is intended to curb “leakage” of retirement savings from 401(k) plans prior to retirement. It would (1) extend the repayment term of a 401(k) loan if an employee loses his/her job; (2) prohibit the ability of employees to take loans from their 401(k) account via credit cards or similar arrangements; (3) limit an employee to having only three outstanding 401(k) loans at a time; and (4) permit an employee to make 401(k) contributions within the six-month period following a hardship distribution from his or her 401(k) account. The second bill (found here) would require employers sponsoring 401(k) plans to, at least annually, include an item on the employee’s quarterly benefit statement that provides what the monthly annuity payment would be if the employee’s current 401(k) balance was used to buy an annuity.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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