Legislative Update - Fall 2018
Sept. 24, 2018 | By Jon Vogler
The Family Savings Act of 2018 (shown in the “Retirement reform” section below) focuses on retirement and savings issues
and is part of the “Tax Reform 2.0” package of bills which follow up on the Tax Cuts and Jobs Act from late last
year. Among other things, The Family Savings Act of 2018 would provide for:
- Easing of rules around multiple employer plans (“MEPs”), which would allow small employers from disparate industries to band together and offer a common retirement plan to employees, thereby reducing cost and administrative duties
- Improvement of rules relating to the election of safe harbor 401(k) plans
- Repeal of the maximum age for making traditional IRA contributions
- Portability of lifetime income investments
- Modification of nondiscrimination rules to protect older, longer service participants
- An exemption from required minimum distribution rules for individuals with $50,000 or less in retirement savings
- Creation of a tax-preferred savings vehicle (“Universal Savings Account”) that would be taxed like a Roth IRA, but would not need to be held for retirement (the contribution limit would be the lesser of $2,500 or the amount of compensation earned during the year)
- Allowing families to access their retirement accounts for new child expenses (birth or adoption) capped at $7,500, without payment of the 10% penalty tax for early distributions
- Expanding Section 529 education savings accounts to also be available for apprenticeship program fees, additional K-12 expenses (including for special needs), covering the cost of home schooling and helping to pay off student debt
The bill was passed by the House at the end of September, but there is currently no expectation that it will be brought up in the Senate before the mid-term elections. Some experts believe that a retirement savings bill which includes some provisions of the Family Savings Act of 2018 and some elements of the Retirement Enhancement and Savings Act of 2018 (“RESA”, also in the “Retirement reform” section) has a decent chance of being enacted by the end of the year.
Download the PDF to learn about bills that are actively being considered by Congress at this time. For more information on these and other bills, go to the Library of Congress website at https://congress.gov/.