House Ways and Means Committee Chairman Kevin Brady, R-Texas, released a tax and oversight package late Monday that includes the Retirement, Savings, and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018.
In announcing the sweeping package, Brady said that it includes retirement and other savings enhancements, legislation to redesign the Internal Revenue Service, and temporary tax relief for victims of the wildfires in California and for communities impacted by hurricanes Florence and Michael and by storms and volcanoes in the Pacific.
The bill directs the IRS commissioner to submit a plan to restructure the agency, with a focus on boosting taxpayer service and cybersecurity, by Sept. 30, 2020.
The package also addresses the tax extenders, and includes “time-sensitive technical corrections” to the tax overhaul passed in 2017.
“This broad, bipartisan package builds on the economic successes we continue to see throughout our country,” Brady said. “The policy proposals in this package have support of Republicans and Democrats in both chambers. I look forward to swift action in the House to send these measures to the Senate.”
Industry officials had anticipated the likely passage of a retirement savings bill during the lame duck session of Congress.
The bill incorporates provisions of the Retirement Enhancement and Savings Act (RESA).
“After an initial review of Chairman Brady’s latest tax and retirement package, IRI is pleased to see that provisions of the Retirement Enhancement and Savings Act are included in this bill that were not part of the Family Savings Act,” Paul Richman, IRI’s vice president of government affairs, told ThinkAdvisor late Monday. IRI “will continue to study this latest proposal in greater detail. We will continue to advocate that Congress enact comprehensive retirement security legislation before adjourning for the year.”
Brady’s bill includes provisions on multiple employer plans; pooled employer plans; rules relating to election of safe harbor 401(k) status; certain taxable non-tuition fellowship and stipend payments treated as compensation for IRA purposes; and repeal of maximum age for traditional IRA contributions.
The American Council of Life Insurers noted in a Tuesday statement that Brady’s package also includes provisions that were part of the Family Savings Act, which passed the House in September, as well as RESA, which has bipartisan support in the House and Senate.
The package will “enhance and expand access to America’s retirement system, with a much-needed focus on small employers,” ACLI stated.
As ACLI notes, Brady’s bill makes it easier for employers to offer annuities in their retirement plans; ensures all workers receive an illustration of how their workplace retirement savings translate into monthly income; and “continues lifetime income protections for savers who participate in plans undergoing changes.”
The Tax Foundation noted that Brady’s bill would help support startup businesses and “make important technical fixes” to last year’s tax overhaul.
Highlights of the bill, as noted by the Tax Foundation, include:
- Making corrections to the tax law on write-offs for retail property and business net operating losses;
- Establishing a deduction of up to $20,000 in startup expenses for new businesses; and
- Allowing for penalty-free retirement account withdrawals of up to $7,500 upon the birth or adoption of a child.
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