President Trump and Congressional Republicans want to keep the focus on tax policy heading into the midterm elections. To that end, House Ways & Means Committee Chairman Kevin Brady (R-TX, 8th) publicly announced at the end of June that he will begin circulating a tax reform 2.0 draft proposal to the House Republican caucus after they return from the Fourth of July break. Further, he expects to see the tax reform 2.0 legislative outline – likely as a package of multiple bills – released in early August in the House of Representatives with votes likely to come in the fall.
Tax Reform 2.0
We expect one of those bills to contain new retirement savings policies, a topic largely unaddressed in tax reform 1.0. One major retirement savings “reform” which had been a topic of much concern during the tax reform 1.0 debate – so-called “Rothification” that severely limited the amount of 401(k) contributions individuals can make on a pre-tax basis – is not on the table. However, we expect the creation of a more general individual savings vehicle – called Universal Savings Accounts (USAs) – to be included. Under the proposal, any individual aged 18 or older can open up a USA account and contribute up to $5,500 per year (indexed) on a Roth basis to the account. All distributions (with earnings) are exempt from income tax and individuals may take a distribution from the account at any time for any purpose. Another proposal likely to be included in the 2.0 retirement savings package is a provision allowing for two or more unrelated private employers to join a pooled employer plan.
The Bipartisan Budget Act of 2018, signed into law in February 2018, established the Joint Select Committee on Solvency of Multiemployer Pension Plans (JSCSMPP). The goal of the JSCSMPP is to improve the solvency of multiemployer pension plans and the portion of the Pension Benefit Guaranty Corporation (PBGC) that guarantees a minimum level of benefit to participants in these plans. The JSCSMPP shall vote no later than November 30, 2018, on a report that contains a detailed statement of the findings, conclusions, and recommendations of the JSCSMPP as well as proposed legislative language to carry out those recommendations. If a majority of the members of the JSCSMPP in both parties vote to approve the legislative language, then the product will be considered on a fast-track process through the Senate.
In April 2018, the JSCSMPP solicited input from stakeholders as the joint committee works on its report and recommendations. The deadline to respond to the JSCSMPP is September 30, 2018. ACOPA has created a task force to submit comments to answer this request on behalf of the American Retirement Association.
Other Retirement Policy Legislation
On April 25, 2018, Senators Todd Young (R-IN) and Cory Booker (D-NJ) introduced the Commission on Retirement Security Act (S. 2753). This bipartisan bill would establish a 15 member commission (comprised of the Secretaries of Commerce, Labor, and Treasury and 12 members appointed by Congress) to conduct a comprehensive study on the state of retirement security in America. The Commission would be charged with reviewing existing private benefit programs, private retirement plan coverage, societal trends in the workforce, and to conduct a comprehensive review of other countries’ retirement programs. If three-quarters of the Commission agree, the Commission would submit a detailed statement of its findings, conclusions, and recommendations for any appropriate legislation or administrative actions resulting from the study. It is unlikely this bill will be addressed in this Congress, but it shows a bipartisan interest in examining these issues from two newer but influential members of the United States Senate. In fact, Senator Young is one of the retirement plan industry influencers scheduled to address our NAPA members attending the NAPA D.C. Fly-In Forum on July 24, 2018.