Senate sponsors of a bipartisan package of retirement initiatives are pushing back on reports from House Ways and Means Committee Chairman Kevin Brady that he will include it in "Tax Reform 2.0" legislation he plans to outline next week to his committee members.
Senate Finance Committee Chairman Orrin Hatch, R-Utah, and ranking member Ron Wyden, D-Ore., are the lead co-sponsors of the proposed Retirement Enhancement and Savings Act of 2018. It was introduced in March, but already had been passed unanimously by the committee in the previous session of Congress, which ended before further action could be scheduled.
Among other provisions, RESA would make it easier for smaller employers to join open multiple employer plans, ease non-discrimination testing rules for plan sponsors, lift a 10% safe harbor cap on default contributions for automatic enrollment and escalation in defined contribution plans, and give cooperatives and small-employer charities smaller Pension Benefit Guaranty Corp. premiums.
A House counterpart bill was introduced March 15 by Rep. Ron Kind, D-Wis., and Mike Kelly, R-Pa.
Mr. Brady's recognition of RESA was seen as a way to garner bipartisan support for a second round of tax reform that would make permanent tax-rate cuts for individuals and pass-through businesses that are set to expire in 2026.
Coupling RESA with Tax Reform 2.0 was rejected by Mr. Hatch, according to an email from a Senate Finance Committee staffer that was sent to Ways and Means staff and others.
"RESA cannot be attached to 2.0 because that will never clear the Senate, and (Mr.) Hatch is very upset by the approach (Mr.) Brady is taking. The chairman does not want to lose the legislation to a misguided partisan effort at political point scoring," the email said.
Mr. Hatch's reaction came after the House Ways and Means Committee on Wednesday marked up a smaller bill granting community newspapers more time to fund their pension plans. "Republicans should not be picking out winners and losers through rifle-shot proposals like this," the staff memo said. "We have substantive policy concerns about bailing out companies in this manner," and the newspaper legislation has also not been fully vetted, unlike RESA.
The memo also noted Mr. Brady's strategy "makes the work of the Joint Select Committee on Multiemployer Pensions more difficult." Mr. Hatch co-chairs that committee, which is working toward a November deadline to come up with solutions.
Making tax rates for individuals permanent faces slim chances in the Senate, where it would need the support of at least nine Democrats to pass. The first round of tax reform in 2017 passed without any Democratic votes. Mr. Brady told reporters that the retirement-related provisions in his draft have the backing of Messrs. Hatch and Wyden.
A spokeswoman for Mr. Wyden said RESA is the only part of the tax cut plan that Democrats would likely support, so its best chance of passing is keeping it separate from the tax package.
Bloomberg contributed to this story.
