Congressional Republicans are planning a push for “Tax reform 2.0” later this summer with retirement reform as a potential deal sweetener.
While Democrats are unlikely to support a tax-reform package that would extend the controversial cuts beyond 2025, the GOP will leverage parts of the Retirement Enhancement and Savings Act (RESA) to attract bipartisan support, according to The Wall Street Journal.
The retirement plan renovations (or demolitions, depending on point-of-view) will begin with RESA’s provision to make it easier to offer annuities within the 401k plan.
“If passed, the measures would comprise the most significant alterations to 401(k) plans since 2006, when Congress made it easier for employers to enroll workers automatically and invest money in funds that shift focus from stocks to bonds as people age,” the paper reported, referring to the previous decade’s Pension Protection Act.
The Senate Finance Committee approved RESA in 2016, but it stalled due to competing legislative priorities.
Republicans plan to scrap and salvage portions of the bill in their upcoming push, while also including new provisions.
Sen. Orrin Hatch, R-Utah, RESA’s main sponsor and the longest-serving Republican politician in U.S. Senate history, will retire at the end of this term, so Rep. Kevin Brady, R-Texas, chairman of Ways and Means, and Rep. Richard Neal, D-Mass., the committee’s opposition leader, will grab the bipartisan legislative flag.
While RESA’s provisions mainly address annuities and litigation limitations surrounding their use, separate legislation introduced Tuesday will address multiple-employer plan (MEP) fiduciary issues, paving the way for greater coverage among small business employees, according to the Journal.
Health savings accounts will also be addressed, with Rep. Mike Bishop, R-Mich., a Ways and Means member, claiming lawmakers want to make them easier to use. Ways and Means last week acted to loosen HSA restrictions.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
