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May 5, 1998

TO: Retirement Administrators/CEOs

FROM: Cindie Moore, NCTR Washington Counsel

RE: H.R. 3788, "Retirement Security for the 21st Century Act," by Reps. Portman (R-OH) & Cardin (D-MD) includes Portability Provisions and Increases in Pension Caps

For a detailed summary, call me at 703-243-3494 for a copy.

Portability: H.R. 3788 includes the provisions similar to those in the Retirement Account Portability (RAP) Act (H.R. 3503 by Reps. Pomeroy (ND-D) & Kolbe (R-AZ)). First, 403(b) and 457 money could be used to purchase service credit in governmental defined benefit plans. Second, rollovers to 403(b)'s and 457's would be allowed.

Increases in Pension Caps: The following changes, which would be indexed more generously than under current law, are being proposed.

* *In addition, the contribution limit for 457 participants three years before normal retirement age (i.e., the "catch up") would be $30,000 (indexed).

First Note: If you administer a 457 plan, there are a number of other changes affecting that type of plan. Be sure to get a copy of the summary.

Second Note: The bill text is not yet available. Thus, several issues are outstanding. First, H.R. 3788 would raise the compensation limit under Section 401(a)(17) to $235,000. It is not clear whether this would affect the grandfather for state and local plans. Second, it is not clear whether the bill affects the "catch up" for 403(b)'s. Call me if you have questions or feedback.