Ted Cruz Blocks SECURE Act

Texas Senator Ted Cruz. SECURE Act, 529 plans
Ted Cruz put a “hold” on the SECURE Act due to concerns over the removal of a 529 plan provision

After the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) passed in the House on May 23 with an overwhelmingly bipartisan majority 417-3 vote, it looked like the bill was set up for “unanimous consent” approval in the Senate through a process known as “hotlining.”

Had it proceeded to a vote before the Senate’s Memorial Day recess, it could now sit on President Trump’s desk, on its way to becoming the law of the land.

Of course, it can’t be that simple in Congress, and once again it isn’t.

A handful of Republican senators, including Ted Cruz (R-TX), placed a “hold” on the bill due to concerns over some provisions that were stripped out of the House version of SECURE Act just before it passed.

Chief among them was a provision that would expand the capabilities of 529 plans, allowing them to be used to pay for homeschooling expenses.

The original bill that came from the House Ways and Means Committee after a unanimous, bipartisan vote included the 529 expansion Cruz is fighting for in the Senate, but in a last-minute decision, House Democrats removed the education provisions from the bill on a party-line vote in the House Rules Committee before sending the bill to the floor.

According to a May 22 article in the Washington Examiner, Democrats “caved” to pressure from teachers unions, which the article said “object to American families being allowed to spend their own 529 savings on homeschooling.”

Rep. Jason Smith
Rep. Jason Smith

Rep. Jason Smith, (R-MO), who introduced the Student Empowerment Act with Cruz which was originally included in the SECURE Act, slammed Democrats for sabotaging his attempt to alleviate the cost of “children’s unique education needs,” no matter how they were schooled, as well as “educational therapies for students with disabilities” and “standardized testing fees,” per the Examiner article.

In 2017, 529 plans were modified to allow parents to use money in those accounts for K-12 expenses. Cruz and Smith want to build on those reforms by allowing 529 funds to go toward homeschooling, apprenticeships, student loan expenses, and education support for students with disabilities.

Proponents say that for parents who still want to save and accrue tax-free earnings with 529 plans until college, nothing changes—the 529 expansion is just more choice for those who want it.

With his “hold” on the SECURE Act, Cruz is fighting to put the new 529 provisions into the Senate version of the bill before the vote.

Supporters remain optimistic that the situation can be resolved relatively quickly (within the next two weeks), and pass the House version of the SECURE Act “as is” so the Senate does not have to pass its own bill, the Retirement Enhancement Savings Act (RESA), and reconcile any differences with the House bill in conference. That would eat up limited floor time on an always-crowded congressional calendar, and could slow the path to significant retirement reform making it to President Trump’s desk by months.

If the Senate were to pass the SECURE Act as is, Cruz could then try to get the Student Empowerment Act passed on its own, although it would still likely face opposition from the Democrats and teachers unions.

There are reports that other unnamed senators who have placed “holds” on the SECURE Act have concerns about additional “special interest” provisions of the bill, including one to provide pension funding relief to certain community newspaper plans.

Still, with the strong overall bipartisan support and a real opportunity for Congress to show the American people it can “get something done,” the current “holds” on the SECURE Act could be overcome and the bill could still make it to President Trump’s desk sooner rather than later.

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Brian Anderson Editor
Editor-in-Chief at  | banderson@401kspecialist.com | + posts

Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.

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