Fall 2018 Advocacy Update Andrew Remo, Director of Legislative Affairs American Retirement Association aremo@usaretirement.org
What We Will Cover 2018 midterm election results 116 th Congress congressional and committee leadership 115 th Congress lame-duck agenda Pending retirement savings legislation will something get done? Brief regulatory update IRS hardship distribution guidance 2
U.S. House 235 Democrats to 200 Republicans (D +40) U.S. Senate 53 Republicans to 47 Democrats/Independents (R +2) Governors 27 Republicans to 23 Democrats (D +7) State Legislatures 61 R Chambers to 37 D Chambers (D +7) Only one divided state legislature Minnesota (D House; R Senate) 3
New House Leadership? 4
House Leadership and Key Committee Chairs House Democratic Leadership Speaker-designate Nancy Pelosi (D-CA, 12th) Majority Leader Steny Hoyer (D-MD, 5th) House Republican Leadership Minority Leader Kevin McCarthy (R-CA, 23rd) Minority Whip Steve Scalise (R-LA, 1st) House Ways & Means Committee Chairman Richard Neal (D-MA, 1st) Ranking Member Kevin Brady (R-TX, 8th) House Education & Labor Committee Chairman Bobby Scott (D-VA, 3rd) Ranking Member Virginia Foxx (R-NC, 5th) 5
Senate Leadership and Key Committee Chairs Senate Republican Leadership Majority Leader Mitch McConnell (R-KY) Majority Whip John Thune (R-SD) Senate Democratic Leadership Democratic Leader Charles Schumer (D-NY) Democratic Whip Dick Durbin (D-IL) Senate Finance Committee Chairman Chuck Grassley (R-IA) Ranking Member Ron Wyden (D-OR) Senate HELP Committee Chairman Lamar Alexander (R-TN) Ranking Member Patty Murray (D-WA) 6
Lame-Duck Agenda Government Funding Bill Congress only approved five out of 12 FY 2019 spending bills for entire year More than eight agencies only funded through Friday, December 21, 2018 If Congress does not act, then government partial shutdown after December 21 Parties locked in a battle over border wall funding Farm/Food Assistance (SNAP) Bill National Flood Insurance Program Reauthorization Violence Against Woman s Act (VAWA) Reauthorization IRS Reforms Other tax issues? Retirement tax provisions? Tax extenders? H.R. 1 corrections? 7
Lame-Duck Tax Package House Republican s latest tax bill (H.R. 88) just rebooted Total cost? = $54 billion over ten years Retirement, Savings, and Other Tax Relief Act of 2018 Tax extenders Disaster tax relief provisions Retirement and savings tax provisions Start-up business tax provisions Obamacare tax provisions (new addition) H.R. 1 technical corrections and clarifications Taxpayer First Act of 2018 IRS reforms 8
Lame-Duck Tax Package The retirement savings provisions included in H.R. 88 are result of negotiations between Republican staff on the House W&M and Senate Finance Committees Melds together the differences between the Family Savings Act & the Retirement Enhancement and Savings Act (RESA)
Retirement Savings Provisions Provisions in H.R. 88 that were also in both bills (ten items): Pooled Employer Plan language (open MEPs) Note: does not currently apply to 403(b) plans Safe-harbor 401(k) plan election improvements Repeal of maximum age for IRA contributions No QP loans through credit cards Lifetime income portability 403(b) custodial account termination fix Church plan clarification Additional time to adopt a qualified plan Large ER closed plan nondiscrimination testing relief ER annuity purchase fiduciary safe harbor
Compromises: Retirement Savings Provisions QACA cap increased from ten to 15 percent (RESA removed cap entirely) Small ER startup credit increase more modest House gets: Amount = greater of $500 or the lesser of $250 per NHCE or $1,500 (RESA = $5,000) RMD exemption for individuals with aggregate account balance less than $50,000 with new reporting requirements New waiver from additional income tax on distributions used for childbirth or adoption expenses Ready reservists in the Armed Forces allowed to make elective deferrals
Retirement Savings Provisions Senate gets: Graduate student stipends allowed for IRA contributions Small ER auto-enroll credit Amount = $500 for three years Applies to new or existing plans that switch designs Lifetime income disclosure requirement CSEC plan premium relief No USA savings accounts No controversial 529 provisions (recently added to H.R. 88) Other items left out of H.R. 88: Clarification on governmental employee pick-up contributions Combined annual report for plans with same trustee and investments
Hardship Distribution Guidance IRS issues new guidance on hardship distributions: Designed to implement statutory changes in the Bipartisan Budget Act of 2018 Elimination of six-month suspension Elimination of plan loan first requirement Hardship distribution definition expanded Safe harbor list of hardship expenses modified Expansion of accounts eligible for hardship distributions Special Rules for 403(b) plans 403(b) elective deferrals ineligible for hardships QNECs and QMACs in 403(b)(7) custodial accounts ineligible for hardships
Questions?
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