By Pension and Benefits Editorial Staff
The full House has approved three tax bills that are part of Republicans' three-pronged “Tax Reform 2.0” package. Two of the measures, approved by the House on September 27, 2018, focus on retirement savings and business innovation.
The most controversial bill of the package, which would make permanent tax reform's individual and small business tax cuts enacted last December, was approved by the House on September 28. At this time, the Senate is neither expected to vote on the Tax Reform package before midterm elections in November nor approve the Tax Reform 2.0 package in its entirety.
Tax Reform 2.0. The Tax Reform 2.0 package was approved by the House Way and Means Committee on September 13, 2018. The following three bills are included in the package:
- Protecting Family and Small Business Tax Cuts Bill of 2018 (HR 6760);
- Family Savings Bill of 2018 (HR 6757); and
- American Innovation Bill of 2018 (HR 6756).
The House approved HR 6757, the retirement bill, on September 27 by a 240-to-177 vote. HR 6756 was approved minutes later by a 260-to-156 vote. HR 6760 was passed on September 28 by a 220-to-191 vote.
Savings accounts. HR 6757 proposes an expansion of certain savings incentives. Among other things, the bill would eliminate the age limit on individual retirement account (IRA) contributions.
Additionally, it would create a Universal Savings Account (USA), to which individuals could contribute up to $2,500 annually. Withdrawals from the USA accounts would be tax-free. Tax-advantaged funds in the USA could be used for purposes other than retirement. Also, the bill would expand Code Sec. 529 plans to permit their use for expenses related to trade schools, home schooling, and up to $10,000 in total distributions for repayment of student loans.
Democratic criticism. Democrats remain united in their opposition of Republicans' Tax Reform 2.0 efforts. The lack of Democratic support makes the package's success in the Senate, at least in current form, highly unlikely. Also, Senate Majority Leader Mitch McConnell (R-KY) has said that the Senate will not take up any bills in the package until the requisite votes are accounted for. There is talk on Capitol Hill that the retirement bill could be approved by Congress in the lame duck session toward the end of the year.
Source: HR 6757.
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