COLA freeze for qualified retirement plans pulled from stimulus bill
The American Retirement Association said Thursday it has successfully lobbied for a provision to be pulled from the COVID relief bill that it said could have undermined retirement savings plans. The nearly $2 trillion American Rescue Plan Act of 2021 (H.R. 1319) passed by the House of Representatives Feb. 27 included a provision that would freeze the annual cost-of-living adjustments (COLAs) for overall contributions to defined contribution plans and for the maximum annual benefit under a defined benefit plan, effective for calendar years beginning after 2030. The provision also applied to the limit on the annual compensation of an employee that may be taken into account under a qualified plan. According to the ARA, the freeze also would have reduced the incentive for employers to offer a qualified retirement plan and could cause some employers to terminate their plans. “We are strong advocates in supporting the retirement industry and participants,” said Keith Gredys, a plan adviser in Clive who serves on the National Association of Plan Advisors Leadership Council, an ARA affiliate. “It would have been difficult to unwind that if it passed,” he said. The Senate is expected to begin debating H.R. 1319 today and hopes to approve the legislation perhaps as soon as this weekend.