Clients Might Get to Tap Retirement Plan Assets for Home Modifications
Clients could use up to $30,000 in tax-free retirement plan distributions to make homes safer or more accessible.
A group with roots in the home remodeling industry is seeking support from life insurers and other financial services players for H.R. 7676, the Home Modification for Accessibility Act of 2022.
The bill would let retirement savers take penalty-free “qualified retirement home improvement distributions” from IRAs, 401(k) plans, 403(b) plans or 457 plans.
After age 59½, they could take an above-the-line tax deduction in the amount spent on eligible home modifications, whether from retirement savings or other funds.
Eligible clients could use the cash to make a primary residence more secure, safer for older adults, or more accessible for older adults with disabilities without paying federal income taxes on the distributions.
Rep. Charlie Crist, D-Fla., introduced the bill at the request of the Washington-based HomesRenewed Coalition.
What It Means
If H.R. 7676 became law, the new tax deduction could give clients another reason to tap their retirement plans.
But, if the new law was implemented as written and worked as drafters expect, it might help clients maximize the amount of time they can stay in their own homes in their later years and minimize spending on facility-based long-term care services.
The Coalition
Louis Tenenbaum, the founder and CEO of the HomesRenewed Coalition, started out as a home remodeler.
He helped older clients adapt homes for “aging in place,” and he began trying to draw attention to the aging-in-place concept.
The MetLife Mature Market Institute drew attention to his work by publishing a paper he wrote, “Aging in Place 2.0: Rethinking Solutions to the Home Care Challenge,” in 2010.
One of the members of the HomesRenewed Coalition advisory board is Eileen Tell.
Tell worked in the long-term care insurance industry for almost three decades. She spent three years at LifePlans, when the U.S. private long-term care insurance market was expanding, and then worked at LTCG, a long-term care insurance support services firm, for more than 25 years.
The Bill
Crist has lined up just two co-sponsors for H.R. 7676, but he has attracted bipartisan support: Rep. Tom Suozzi, D-N.Y., and Rep. Daniel Meuser, R-Pa.
House leaders have referred the bill to the House Ways and Means Committee.
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