Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
House Tax Writing Committee Releases Bipartisan Retirement Package
Old 10-28-2020, 05:08 AM   #1
Recycles dryer sheets
 
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
House Tax Writing Committee Releases Bipartisan Retirement Package

Thought this development was interesting and worth keeping an eye on: https://www.rollcall.com/2020/10/27/neal-brady-unveil-retirement-savings-proposal/

The story notes that passage in the upcoming lame duck session is unlikely. It is bipartisan, however, so could move at some point down the road.
WyomingLife is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-28-2020, 05:14 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jan 2018
Location: Tampa
Posts: 7,117
Yep, a move to 75 y.o. for the start of RMD can be a good thing for many folks on this site, who aren't dependent on the full required distribution and can continue Roth conversions.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 10-28-2020, 05:34 AM   #3
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Sheltered in place
Posts: 33,225
Quote:
Originally Posted by WyomingLife View Post
Thought this development was interesting and worth keeping an eye on: https://www.rollcall.com/2020/10/27/...ings-proposal/

The story notes that passage in the upcoming lame duck session is unlikely. It is bipartisan, however, so could move at some point down the road.
Perhaps you could give us a summary of the bill and highlight what is most significant for ER Forum community members?
MichaelB is offline   Reply With Quote
Old 10-28-2020, 05:48 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 10,161
Quote:
Originally Posted by MichaelB View Post
Perhaps you could give us a summary of the bill and highlight what is most significant for ER Forum community members?
From the article:

House Ways and Means Committee leaders introduced a long-awaited bipartisan collection of retirement savings incentives on Tuesday, building off another sweeping package enacted late last year.

The new proposal, intended to lay the groundwork for action next year if not in a postelection lame-duck session, would among other things expand and enhance the saver’s credit for lower-income households.

The bill would also increase the age for required minimum distributions from 401(k)s and other tax-favored retirement plans from 72 to 75 years old, adding options for older savers wrestling with weak stock market returns and low interest rates amid the coronavirus pandemic.

The 132-page draft bill won plaudits from financial services associations, and its inclusion of provisions from a Senate bill foreshadows bicameral support for the package.

In one long-sought change, the bill would allow employees to count student loan repayments toward their employers’ matching contribution for a retirement account. The IRS in 2018 ruled that health care products company Abbott Laboratories could offer such a plan to its employees, which the legislation would codify and incentivize other companies to do the same.

Other provisions would require employers offering a new retirement plan to automatically enroll eligible employees; boost limits for catch-up contributions to retirement plans by workers who have reached age 50 from $6,500 a year to $10,000; and enhance an existing tax credit for small employers starting a workplace plan sweetened by a new tax credit of up to $1,000 per employee.

The “baby boomer catch-up” provision, which increases how much people who have reached 50 years of age can contribute to their plan, is a welcome feature, said Paul Richman, chief government and political affairs officer at the Insured Retirement Institute. “According to our research, 45 percent of baby boomers have zero retirement savings,” he said.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 10-28-2020, 05:51 AM   #5
Recycles dryer sheets
 
Join Date: Sep 2018
Location: High Plains Non-Drifter
Posts: 314
Cut and pasted from the House Ways & Means press release (source: https://waysandmeans.house.gov/media...en-americans):

"The Securing a Strong Retirement Act of 2020 will:

"Promote savings earlier for retirement by enrolling employees automatically in their company’s 401(k) plan, when a new plan is created;

"Create a new financial incentive for small businesses to offer retirement plans;

"Increase and modernize the existing federal tax credit for contributions to a retirement plan or IRA (the Saver’s Credit);

"Expand retirement savings options for non-profit employees by allowing groups of non-profits to join together to offer retirement plans to their employees;

"Offer individuals 60 and older more flexibility to set aside savings as they approach retirement;

"Allow individuals to save for retirement longer by increasing the required minimum distribution age to 75;

"Allow individuals to pay down a student loan instead of contributing to a 401(k) plan and still receive an employer match in their retirement plan;

"Make it easier for military spouses who change jobs frequently to save for retirement;

"Allow individuals more flexibility to make gifts to charity through their IRAs;

"Allow taxpayers to avoid harsh penalties for inadvertent errors managing an IRA that can lead to a loss of retirement savings;

"Protect retirees who unknowingly receive retirement plan overpayments; and

"Make it easier for employees to find lost retirement accounts by creating a national, online, database of lost accounts."

The press release is here: https://waysandmeans.house.gov/media...then-americans

A detailed section by section summary is here: https://waysandmeans.house.gov/sites...tion_final.pdf

And the bill itself is here: https://waysandmeans.house.gov/sites...AL_060_xml.pdf

The House of Representatives and White House have been negotiating for weeks on another pandemic-related recovery/stimulus package, of course, with no success. Many political observers expect that Congress and the White House -- whether in the upcoming lame-duck session or early in 2021 -- will eventually enact another such law, particularly given the state of both the pandemic and economy. And in that scenario, this tax bill could possibly be tacked onto such a broader relief bill, and thus become law. So this tax bill isn't just another tax bill; it potentially has legs.

YMMV
WyomingLife is offline   Reply With Quote
Old 10-28-2020, 06:39 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 16,130
Quote:
Originally Posted by donheff View Post
The bill would also increase the age for required minimum distributions from 401(k)s and other tax-favored retirement plans from 72 to 75 years old, adding options for older savers wrestling with weak stock market returns and low interest rates amid the coronavirus pandemic.
+1. I assume this would be popular here (me included) if enacted - until/unless tax rates change radically.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 40% equity funds / 35% bond funds / 25% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 10-28-2020, 06:44 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Apr 2008
Posts: 1,088
Quote:
Originally Posted by donheff View Post
The “baby boomer catch-up” provision, which increases how much people who have reached 50 years of age can contribute to their plan, is a welcome feature, said Paul Richman, chief government and political affairs officer at the Insured Retirement Institute. “According to our research, 45 percent of baby boomers have zero retirement savings,” he said.
I'm sorry, but if someone has zero retirement savings at age 50, these changes will do little, if anything, to make that change.
statsman is online now   Reply With Quote
Old 10-28-2020, 08:25 AM   #8
Full time employment: Posting here.
MrsHaloFIRE's Avatar
 
Join Date: Jun 2018
Posts: 559
Agree with statsman. Ppl with no retirement savings arent going to overnight come up with regular and catchup contributions overnight bc of an epiphany
MrsHaloFIRE is offline   Reply With Quote
Old 10-28-2020, 08:29 AM   #9
Thinks s/he gets paid by the post
Markola's Avatar
 
Join Date: Nov 2013
Posts: 1,625
Quote:
Originally Posted by statsman View Post
I'm sorry, but if someone has zero retirement savings at age 50, these changes will do little, if anything, to make that change.


+1. Tax fiddling is not going to convert many people from being non savers to savers. Personally, I wish Congress would put as much energy into shoring up Social Security, which would be a more efficient way to help many more people.
Markola is offline   Reply With Quote
Old 10-28-2020, 08:35 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Apr 2015
Posts: 1,906
Quote:
Originally Posted by Markola View Post
+1. Tax fiddling is not going to convert many people from being non savers to savers. Personally, I wish Congress would put as much energy into shoring up Social Security, which would be a more efficient way to help many more people.
+1
__________________
Give me a fish, I will eat for a day. Teach me to fish, I will eat for a lifetime.
pacergal is offline   Reply With Quote
Old 10-28-2020, 08:52 AM   #11
Moderator
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 7,405
Quote:
Allow taxpayers to avoid harsh penalties for inadvertent errors managing an IRA that can lead to a loss of retirement savings;
This sounds a good thing, but I didn't read the details. There are "oopsie's" that can be devastating. But these tend to bring in loophole strategies, like making several Roth conversions and recharacterizing all but one. They had to close that loophole.
sengsational is offline   Reply With Quote
Old 10-28-2020, 09:46 AM   #12
Full time employment: Posting here.
 
Join Date: Apr 2011
Location: Castro Valley
Posts: 637
Quote:
Originally Posted by statsman View Post
I'm sorry, but if someone has zero retirement savings at age 50, these changes will do little, if anything, to make that change.
The article doesn't state how many of that 45% have a pension. My wife of four years had virtually nothing in a retirement plan until age 54. She is planning on receiving a healthy pension and SS. She's been saving in her 457 for the last 4 to 5 years. That money will become her emergency reserve upon retirement.
jkern is offline   Reply With Quote
Old 10-28-2020, 01:02 PM   #13
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 4,198
I'd like to eventually see 401k accounts that follow an individual rather than Megacorp-run accounts. How hard can it be to make direct deposits into something just like a Solo 401k instead of a corporate 401k? I'm sure companies would also prefer not to deal with 401k expenses, especially small companies. It seemed really difficult and expensive for my small company to set up its 401k plan. But when I retired I could start a Solo 401k at Fidelity for free, and have access to their full line of stocks, ETF's, and funds. Seems nutty to me.

Same thing for health insurance. Why must it be job-based? We could just have companies contribute to the health insurance account selected by the individual. If the job ends, the individual can continue indefinitely with the same plan by making the full payment. Find a new job and the new company can begin making payments to the account. No need to change health plans and doctors at the will of your company or your job status. So much easier. And everyone would know how much their healthcare actually cost if they could see the company payments going into the account.

Not that I'm complaining about no RMD's until 75!
Animorph is offline   Reply With Quote
Old 10-28-2020, 03:06 PM   #14
Full time employment: Posting here.
Bryan Barnfellow's Avatar
 
Join Date: Feb 2004
Location: Switzerland
Posts: 712
The idea of having student loan payments count toward the match requirement for 401(k)s seems especially helpful. What would be the incentive for companies to offer this benefit?

-BB

* Edit: hey, my 700th post!
__________________
FIREd, April 1, 2015. My Retirement Benefits Package includes: 6 months vacation, twice a year.
Bryan Barnfellow is offline   Reply With Quote
Old 10-28-2020, 03:11 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jan 2018
Location: Tampa
Posts: 7,117
Quote:
Originally Posted by Bryan Barnfellow View Post
The idea of having student loan payments count toward the match requirement for 401(k)s seems especially helpful. What would be the incentive for companies to offer this benefit?

-BB

* Edit: hey, my 700th post!
You will get an extra star with 300 more posts.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 10-28-2020, 07:34 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: No fixed abode
Posts: 7,973
Quote:
Originally Posted by Animorph View Post
I'd like to eventually see 401k accounts that follow an individual rather than Megacorp-run accounts. How hard can it be to make direct deposits into something just like a Solo 401k instead of a corporate 401k? I'm sure companies would also prefer not to deal with 401k expenses, especially small companies.
IMO that would pretty much kill the matching option than most/many/some 401k plans have. I'm not sure if that's worth the trade off.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
harley is online now   Reply With Quote
Old 10-28-2020, 07:55 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: NC
Posts: 16,130
Quote:
Originally Posted by Animorph View Post
I'd like to eventually see 401k accounts that follow an individual rather than Megacorp-run accounts. How hard can it be to make direct deposits into something just like a Solo 401k instead of a corporate 401k? I'm sure companies would also prefer not to deal with 401k expenses, especially small companies. It seemed really difficult and expensive for my small company to set up its 401k plan. But when I retired I could start a Solo 401k at Fidelity for free, and have access to their full line of stocks, ETF's, and funds. Seems nutty to me.

Same thing for health insurance. Why must it be job-based? We could just have companies contribute to the health insurance account selected by the individual. If the job ends, the individual can continue indefinitely with the same plan by making the full payment. Find a new job and the new company can begin making payments to the account. No need to change health plans and doctors at the will of your company or your job status. So much easier. And everyone would know how much their healthcare actually cost if they could see the company payments going into the account.
I suspect you know the answer to both. Employers have zero interest in making it easier for employees to change employers, pretty obvious.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 40% equity funds / 35% bond funds / 25% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 10-29-2020, 03:13 AM   #18
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 4,587
Quote:
Originally Posted by Markola View Post
+1. Tax fiddling is not going to convert many people from being non savers to savers. Personally, I wish Congress would put as much energy into shoring up Social Security, which would be a more efficient way to help many more people.
I think that conclusion would be considered debatable. Shoring up SS would typically mean increasing funding for SS. Traditionally this has been done through more taxation of workers/employers and/or changing when SS payments become available.

It appears that most of the provisions regarding qualified savings plans would depend upon individual decisions of how much to save and when to withdraw. I'm guessing the qualified savings plan changes would be more popular than the the likely SS changes but YMMV.
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 10-29-2020, 03:14 AM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 9,172
Baby boomers only wish they were still 50.

Quote:
Originally Posted by donheff View Post
The “baby boomer catch-up” provision, which increases how much people who have reached 50 years of age can contribute to their plan, is a welcome feature, said Paul Richman, chief government and political affairs officer at the Insured Retirement Institute. “According to our research, 45 percent of baby boomers have zero retirement savings,” he said.
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success – to be able to spend your life in your own way.’ Christopher Morley.
It involved a mannequin hand, and an electric shaver taped to a golf club! - "The Other Guys"
Amethyst is offline   Reply With Quote
Old 10-29-2020, 07:41 AM   #20
Recycles dryer sheets
 
Join Date: May 2019
Posts: 184
Won’t delaying RMD just create larger distribution amounts and higher taxes? I’d like the option to be able to wait longer before taking RMDs but if that money grows for three more years you’ll just have larger RMD amounts and a higher tax burden. Help me out- what am I missing?
RxMan is offline   Reply With Quote
Reply

Tags
#legislation #tax


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
IRS Releases Draft Versions of 2019 Tax Forms scrabbler1 FIRE and Money 1 10-05-2019 06:50 PM
Senate Finance Committee Approves Bipartisan Pension Bills Big_Hitter FIRE and Money 55 10-05-2016 03:13 AM
House committee OK’s Roth option for TSP Boxkicker FIRE and Money 14 03-19-2009 09:35 PM

» Quick Links

 
All times are GMT -6. The time now is 11:04 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.