Just as retirement planning officials were breathing a sigh of relief that neither the House nor the Senate tax bills included Rothification of 401(k) plans, the Senate Finance Committee chairman said Sunday night that he wants to amend the bill to require that all catch-up contributions be treated as Roth contributions.
Brian Graff, CEO of the American Retirement Association, a retirement industry trade group, calls the move “mini-Rothification.”
As a bit of a trade-off, the amendment, sponsored by Chairman Orrin Hatch, R-Utah, would increase the catch-up contribution limit from $6,000 to $9,000, Graff said.
Graff said that ARA is “working hard” to ensure that another provision to prohibit catch-up contributions for those earning $500,000 or more is eliminated from the Tax Cuts and Jobs Act.
Hatch’s new “mini-Rothifcation” amendment, Graff added, “is a placeholder at this point in case they need revenue as the process unfolds. So we will see if it actually comes up.”
After a long weekend of lobbying on Capitol Hill, Sen. Rob Portman, R-Ohio, offered an amendment “to strike the provision prohibiting catch-up contributions for small-business owners earning more than $500,000 and the provision practically eliminating most forms of nonqualified deferred compensation plans,” or NQDCs.
Graff said that ARA applauded Portman for his leadership on the amendment and that ARA “will be working hard to make sure this amendment passes.”
The Senate begins marking up its bill Monday.