Tax Reform Working Groups Turn in their Homework

Reports from the Senate Finance Committee’s five bipartisan tax working groups have been published, including policy options and recommendations on savings and investment.

On Jan. 15 the Senate Finance Committee, which has jurisdiction over tax policy, announced that Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) were launching five tax reform working groups to develop recommendations for comprehensive federal tax reform. Each of the five bipartisan working groups was co-chaired by a Republican and a Democratic member, and was tasked with working with the Joint Committee on Taxation (JCT) to offer legislative proposals.

Among the recommendations of the Savings and Investment group:

• Consider proposals that allow employers to join open multiple employer plans.
• Increase the start-up and matching credits and safe harbors for small businesses that offer a plan, and further increase the credit for employers who offer automatic enrollment plans.
• Consider proposals to expand the safe harbor for automatic enrollment plans and providing a new credit to further help small employers offer matching contributions.
• Allow part-time workers to enroll in plans.
• Provide clarifications related to church plans.
• Permit improvements related to S-ESOP plans.
• Support allowing a percentage of otherwise taxable lifetime annuity payments received by an individual from an IRA or any type of defined contribution plan to be excluded from gross income.
• Encourage DC plans to offer annuities or other installment products as investment options, so that participants can buy these products gradually over their careers.
• Support proposals that prevent leakage and ensure more secure retirements for taxpayers who take advantage of retirement plans.

In April the American Retirement Association joined with other industry stakeholders in releasing a statement to the Senate Finance Committee working group on Savings and Investment.

Add Your Comments


  1. Kevin
    Posted July 9, 2015 at 11:04 am | Permalink

    “• Encourage DC plans to offer annuities or other installment products as investment options, so that participants can buy these products gradually over their careers.”

    I see the insurance industry was well represented. Who else would recommend putting a high cost tax-deferred investment vehicle inside a qualified plan?

    If they want employers to include more employees in their plans, they need to make changes to the plan audit requirement. Increasing the participant count to be a large plan for plans invested entirely in mutual funds held by a regulated custodian would be a good start. Plan audits for our clients that need them are costing significantly more than we charge for administration. Many of our small plan clients would be large plans if they allowed all employees to participate. How many employers would double or triple the cost of their plan to include people who are unlikely to contribute or stay with the company?

  2. url url'>Terrance Power
    Posted July 10, 2015 at 11:46 am | Permalink

    The recommendation to expand the use of multiple employer plans to increase coverage will result in drastic reductions in annual plan audit costs for employers….as much as 90% or more. Our Platinum 401k clients already realize some significant economies of scale – typically as much as 40% – in their annual plan audit expenses.

    The changes recommended by the bipartisan working group will lower these costs even more, thereby encouraging more employers to expand the availability of retirement plans to their employees.

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