The House Ways and Means Committee introduced three bills Monday afternoon that build on the tax overhaul enacted in 2017 and are being applauded for including retirement planning provisions that are part of the bipartisan Retirement Enhancement and Savings Act (RESA).
Committee Chairman Kevin Brady, R-Texas, said that the bills, which amount to Republicans’ Tax Reform 2.0 package, “will lock in the individual and small-business tax cuts” made law in the tax overhaul, make it easier for families and businesses to save for retirement and aid startup business growth.
Brady announced Tuesday that the Ways and Means committee will take up the bills on Thursday. He told CNBC that a House floor vote is likely in September.
The Protecting Family and Small Business Tax Cuts Act, H.R. 6760, “locks in the tax relief from the [tax overhaul],” Brady said, which included a nearly doubled standard deduction, a doubled child tax credit, lower rates across the board as well as a 20% deduction for pass-through businesses. The bill also allows rollovers to ABLE programs from 529 plans.
The Family Savings Act of 2018, H.R. 6757, makes it easier for businesses to offer retirement savings plans while ensuring workers can easily participate in these plans, and removes regulatory barriers restricting the types of small-business employers who are permitted to band together to offer a retirement plan through a multiple employer plan (MEP).
H.R. 6757 would also end required minimum distributions of funds from 401(k) plans and other retirement savings accounts for retirees with balances under $50,000.
The bill also includes provisions “to ensure that employees who invest in lifetime income options through an employment-based retirement plan will not lose the guarantees associated with those investments if their employer changes recordkeepers,” according to the Insured Retirement Institute, a trade group for the annuity industry.
“Changing these rules would permit Americans to keep more of their money in tax-deferred retirement accounts for a longer period before requiring withdrawals,” IRI said.
American Council of Life Insurers President and CEO Susan Neely applauded the bill for being “consistent” with President Donald Trump’s recent executive order on multiple employer plans in that the legislation “encourages small employers to join together to take advantage of economies of scale to offer workplace retirement plans,” which “could go a long way to helping the 16 million independent contractors in the gig economy.”
Many of these independent contractors, Neely said, “work for small employers who often lack the resources to offer retirement plans to their employees on their own.”
IRI President and CEO Cathy Weatherford said IRI wants Brady to add several “critical provisions” to the legislation that are included in other existing bills.