A second round of tax reform with some — but not all — of the expected provisions on retirement security was introduced Monday by House Ways and Means Committee Chairman Kevin Brady, R-Texas.
The tax reform 2.0 package has three bills, including one to make permanent individual tax rates that expire in 2026. The retirement bill — the Family Savings Act of 2018 — mirrors many of the provisions in a Senate retirement legislative package, the Retirement Enhancement and Savings Act of 2018, that 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 reduce the Pension Benefit Guaranty Corp. premiums paid by cooperatives and small-employer charities.
Unlike RESA, the House's Family Savings Act, H.R. 6757, doesn't include a safe harbor for plan sponsors to select a retirement plan annuity, which the Insured Retirement Institute and other groups are hoping could be added during a legislative conference or by an amendment.
The House version does call for an independent study of PBGC single-employer premiums, but took out the premium relief for cooperatives and small-employer charities, which were not given any explanation for the change.
"We can't understand the absence of these provisions in the bill, since the government's own numbers show that we are being massively overcharged in our PBGC premiums," said Brent Evans, president and CEO of United Benefits Group, a plan sponsor for 350 rural agricultural cooperatives.
Angela Olden, chief financial officer of Girl Scouts of the USA, said the omission will mean less money for programs and scholarships. "We are concerned that the bill does not include the one provision of RESA that would finally fix this for charities so we could spend our limited resources on our core mission."
William C. Daroff, senior vice president and director of the Washington office of the Jewish Federations of North America, called the change "shocking," considering that charitable deductions are expected to drop this year because of changes in the new tax law. "Instead, we are forced to divert monies to artificially prop up PBGC reserves," Mr. Daroff said in an emailed statement.
Tax reform 2.0 is a Republican priority before the November election, and the House has limited time to act on the legislation. A hearing has been tentatively scheduled for Thursday, but Hurricane Florence could change that. A bigger challenge is finding time and grounds for agreement with the Senate.