NTSA’s Glassey, Whaley Testify Before Maryland House of Delegates

Last week, Nathan Glassey, National Tax-Deferred Savings Association’s (NTSA) Executive Director, testified before the Maryland House of Delegates Appropriations Committee.

As with similar testimony before the Maryland Senate’s Budget and Taxation Sub-Committee on Jan. 19, Glassey joined NTSA President-Elect Toni Whaley and a state union representative in opposing a bill mandating auto-enrollment for teachers and state employees in supplemental 457(b) or 403(b) retirement plans.

While Glassey and NTSA generally support auto-enrollment in retirement plans, the Maryland bill would be detrimental to public sector retirement savers, he argued.  

More specifically, the four reasons for NTSA’s opposition are:

1. Too much of a reduction in take-home pay.
2. Limited choice and direction for plan sponsors.
3. The elimination of tax considerations in choosing a Roth versus Traditional 401(k).
4. A disruption of access to qualified financial advisors in decision-making).

Combined, the four factors would make the bill too onerous. 

“The state employee union representative suggested an amendment to study the bill, which would slow the process down considerably,” Glassey explained. “Representatives from Maryland Teachers and State Employees Supplemental Retirement Plans (MSRP) were also there supporting the bill.”

House delegates’ questions primarily centered on plan participant choice.

“One of the representatives asked if we were comparing the bill to a defined benefit plan,” he added. “We said, ‘No, we’re not comparing it to the DB plan. We’re saying they already contribute 7% to the DB plan. He asked how it limits participant choice. We explained that auto-enroll, in this instance, eliminates their choice of Roth or pretax, the vendor it goes to, and advisor access.”

While the participant can take it upon themselves to engage in those things themselves, most rarely do, opting for the default into which they’re automatically enrolled.

“Whether right or wrong, the majority wants to be auto-enrolled and stays in the auto-enrolled option, whether it’s the right choice for them or not, because they’re not meeting with an advisor,” Glassey concluded. “If an advisor comes and meets with them at any time, they could decide to stop their auto enroll amount and do the same percentage into a different company, or whatever else they might want. They’re not stuck; it’s just that they’re less likely to do it.”