Lame duck legislative action late Monday produced a 300-page package designed to positively impact Americans’ retirement savings and business tax breaks, while revamping the IRS.
“The policy proposals in this package have support of Republicans and Democrats in both chambers,” Representative Kevin Brady, R-Texas, chairman of the House Ways and Means Committee (for now) said in a statement. “I look forward to swift action in the House to send these measures to the Senate,”
Covering everything from “small employer automatic enrollment credit” to “fiduciary safe harbor for selection of lifetime income provider,” the bill includes provisions to “expand and preserve retirement savings” through multiple employer plans (MEP).
The broad package includes language for racehorse tax classification, biofuel use, motorsports event centers, mine safety equipment, American Samoa economic development and tuition-related expenses, among others.
Brady was instrumental in passing tax reform last year, widely seen as a major win for the Trump administration.
That bill significantly reduced the U.S. corporate tax rate while reducing the burden on many individual filers, as well.
It also addressed pass-through business taxation, charitable deductions and estate taxes.
Key provisions in the latest bill that would specifically affect 401ks and IRAs include:
- Expanded access to retirement plans by boosting 401k MEP use to capitalize on economies of scale;
- Aforementioned safe harbor provisions to make it easier to offer annuities and guaranteed lifetime income products in 401ka and similar retirement plans;
- The introduction of Social Security-like statements of the individual’s savings amount and estimations of how it would convert to retirement income;
Rep. Richard Neal, D-Mass., is expected to take Brady’s place as chairman when the 116 Congress convenes in Washington on Jan. 3, 2019.
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.
