US - The National Defined Contribution Council in the US has issued its support for proposed legislation that would increase tax limits for 401(k) contributions and also allow participants to divest company stock.
Lou Valentino, chairman of NDCC's Government Relations Committee, said “the bill addresses many needed technical issues that will simplify the administration of retirement plans and promote retirement savings.”
A main thrust of the bill is in giving permanence to the savings incentives made possible by the tax bill enacted in 2001 (EGTRRA) and also in accelerating the rate at which the increased contributions are permitted.
Within the industry, it is believed that the response to the increased contribution limits and catch-up contribution provisions would be far greater if the 2001 changes had not involved incremental increases and were not scheduled to be eliminated in a few years due to the sunset of EGTRRA.
It takes time and money to change pension plan documents, provide for additional savings for 'catch-up' contributions, and to promote and administrate these changes,” added Valentino.
“The lack of permanence works against this effort,” he continued.
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