A legislative tax package with several retirement savings ideas promoted in both the House and Senate was introduced late Monday by House Republicans.
One part of the 297-page tax package is the proposed Retirement, Savings and Other Tax Relief Act of 2018. It builds on the Family Savings Act passed by the House in September and incorporates several provisions from the Senate's proposed Retirement Enhancement and Savings Act of 2018, which has not been voted on. A House version of RESA has more than 80 bipartisan cosponsors.
The latest House proposal in the tax package would make it easier for smaller employers to join open multiple employer plans, ease non-discrimination testing rules for plan sponsors, raise to 15% a 10% safe harbor cap on default contributions for automatic enrollment and escalation in defined contribution plans, and would give employers up until the due date of their tax return to adopt a qualified retirement plan for the previous year. It offers a $500 credit for small employers to automatically enroll workers into a plan and increases the current small employer pension plan startup credit to $1,500 from $1,000.
Charities and cooperative associations would see their premiums paid to the Pension Benefit Guaranty Corp. reduced.
The proposal also includes a fiduciary safe harbor for selecting annuity providers, and for plan sponsors to provide participants with an illustration of how current savings would translate into a lifetime income stream.
In a statement, Cathy Weatherford, president and CEO of the Insured Retirement Institute in Washington, called the proposal "a dramatic development that we hope will fuel momentum in the waning days of this session of Congress to advance comprehensive retirement security legislation," but she acknowledged "much work needs to be done in a very short amount of time."
The House Rules Committee is scheduled to vote Wednesday on clearing the tax package for a floor vote later this week or before Congress adjourns Dec. 7.
House Ways and Means Committee Chairman Kevin Brady, R-Texas, said in a statement that the tax package, which includes corrections and extensions from last year's tax reform measure, has "support of Republicans and Democrats in both chambers." The package would need 60 votes to pass the Senate, including from some Democrats.
Rachel McCleery, spokeswoman for Sen. Wyden, D-Ore., the ranking member of the Senate Finance Committee where RESA originated, tweeted that the House package came as something of a surprise – and in a news release. "There was no communication from his staff, including a heads up that something was coming. That is not how you negotiate," Ms. McCleery said in the tweet.