Lame Duck Tax Bill Includes Retirement Measures

House Republicans released a wide-ranging tax package on Monday night – including a number of retirement savings provisions – setting the stage for negotiations on a year-end tax package as the 115thCongress comes to a close.

The main components of the package (the Retirement, Savings, and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018) include:

  • an extension of various expiring provisions in the Internal Revenue Code (i.e., so-called “tax extenders”);
  • disaster tax relief provisions;
  • retirement and savings tax provisions;
  • start-up business tax provisions;
  • technical corrections and clarifications of the 2017 tax bill; and
  • various reforms to how the IRS enforces the tax code.

The 297-page package includes many retirement savings provisions that have been included in prior legislation considered by both the House and the Senate in recent years. For example, the package would allow two or more unrelated employers to join a pooled employer plan (i.e., an open MEP), give employers up until the due date of their tax return to adopt a qualified retirement plan for the prior year, increase the small employer pension plan start-up credit up to $1,500, and create a new $500 credit to encourage small employers to automatically enroll their workers into a plan.

The package also includes some more recent proposals that were included in the Family Savings Act that cleared the House of Representatives in September ahead of the mid-term elections. These provisions include exempting individuals with less than $50,000 in their retirement savings accounts from the required minimum distribution rules and creating a new waiver from the additional income tax on distributions from retirement accounts that are used to pay for childbirth and adoption expenses. The package also includes an annuity purchase safe harbor for employers, provisions to enhance lifetime income portability, and an increase in the current cap on contributions under the automatic enrollment safe harbor (QACA) contributions from 10% to 15%.

The House of Representatives is expected to consider the package in its entirety as early as this week. However, its prospects in the Senate remain unclear; in order to pass in the Senate and be signed into law by President Trump, any tax provisions would need bipartisan support.

Andrew Remo is the American Retirement Association’s Director of Legislative Affairs.

Post a Comment

Your email is never published nor shared. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Send this to a friend