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Lawmakers ‘Taking a Fresh Look’ at Savings Vehicles in Tax Reform

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Tax reform is coming “very shortly,” House Ways and Means Committee Chairman Kevin Brady said Monday, and lawmakers are “taking a fresh look” at savings vehicles, citing education as one example where the array of plans could be simplified.

While the timeline for tax reform is “accelerating,” it “all pivots off the budget. The Senate taking action last week [on passing its budget] was a huge step forward on this,” Brady said at the Securities Industry and Financial Markets Association’s Capital Markets Conference in Washington.

The Senate budget will be taken up by the House this week; “Thursday is my understanding,” Brady said.

“We’re in a good position to pass that … If we achieve that we’ve really accelerated the timetable to three or four weeks, which increases the likelihood that we get this to the president’s desk by the end of the year.”

Brady added that if Congress can finish a budget this week, the House could get a tax bill together by Thanksgiving. “If we finish the budget this week, we’ll be on schedule,” he said.

As to President Donald Trump’s Monday tweet that there will be “no change” to 401(k) contributions in the tax plan, “We’re working very closely with the president and the tax reform package,” Brady said. 

“Bottom line is we want Americans to save more and save earlier in their life and earlier in their income, because today they don’t. If you look at a profile of who’s saving in America, it is stunningly discouraging. We have to find a better way.”

At the end of the day, he continued, “we are taking a fresh look at the savings plan, the saving vehicle. Education is a great example. There are about 13 or 14 different savings vehicles … we think fewer of them, more flexible with more Americans in them … are part of the solution. We think the combination of retaining tax deductibility — or tax-free savings — is critical … and we think it’s imperative that we create more incentives for families to begin saving earlier.”

He told attendees to “wait to see the entire package … you’re going to see more incentives for more Americans to save.”

Brady added that “we’re not going to change the whole tax code; if something isn’t ready, set it aside.” He said the pension system, for example, “needs serious changes … but that’s not quite ready.” 

— Check out Trump Tax Cuts and Tax-Free Retirement Planning on ThinkAdvisor.