Bipartisan retirement bill unveiled in House

Tax Hot Topics newsletter House Ways and Means Committee Chair Richard Neal (D-Mass.) and Ranking Minority Member Kevin Brady (R-Tex.) have introduced a retirement bill that could be among Congress’s future tax priorities.

The Securing a Strong Retirement Act looks to build off changes made by Setting Every Community Up for Retirement Enhancement (SECURE) Act late last year. It would create and enhance several incentives designed to expand plan coverage and encourage more saving. Major changes in the bill include:

  • Increasing the three-year credit for small business pension plan startup costs to 100% for employers with up to 50 employees, capped at $5,000 annually, and providing an additional credit of up to $1,000 per employee for contribution’s made on an employee’s behalf.
  • Allowing small businesses that join an existing multiple employer plan (MEP) to claim the small business pension plan startup cost credit for all three years.
  • Permit employers to make matching 401(k), 403(b) or SIMPLE IRA contributions for “qualified student loan payments” made by an employee.
  • Allowing 403(b) plans to participate in MEPs under SECURE Act rules, including granting relief from the “one bad apple” rule.
  • Replacing the current tiered rate structure of the Saver’s Credit with a single, 50% rate, increasing the maximum credit to $1,500 per person and raising the income eligibility amount.
  • Increase the age for required mandatory distributions from retirement plans from 72 to 75.
  • Indexing the $1,000 Individual Retirement Account catch-up contribution limit for individuals 50 years or older to inflation beginning in 2022.
  • Creating a higher retirement plan catch-up contribution limit for individuals 60 years or older. The limit would be $10,000 or $5,000 for SIMPLE plans, both indexed for inflation.

With support from the top two tax writers in the House, the bill could garner serious consideration when Congress looks to advance a broader tax package in the future.

Dustin Stamper
Managing Director
Washington National Tax Office
T +1 202 861 4144

Omair Taher
Washington National Tax Office
T +1 202 861 4143

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