House Votes To Ease Rules For IRAs, Makes Fixes To Trump Tax Law
Source from fa-mag.com |
The U.S. House of Representatives approved legislation that relaxes the rules for retirement savers and corrects an unintended side-effect of the 2017 tax law that hit children of military members who died in combat with higher-than-expected tax bills.
The bill, which passed Thursday with a vote of 417-3, delays until 72 the age at which retirees must start withdrawing from individual retirement accounts and removes the age limit at which taxpayers must stop contributing. Now, taxpayers have to stop contributing to such accounts at age 70 1/2 and begin taking distributions. An amendment recently added to the bill also reverses an error in the 2017 tax law that had caused military families, known as “Gold Star” families to owe much higher taxes on survivor benefits.
The retirement legislation passed the House Ways and Means Committee last month. The bill has broad bipartisan support, making it one of the few pieces of legislation this year that might be approved by the Senate and signed into law. In addition to increasing the age limit for required minimum distributions, the bill also makes it easier for companies to unite and form joint retirement plans, and attempts to incentivize the creation of such plans for part-time workers and small businesses.
Before Thursday’s vote, some Republicans expressed frustration that the House late in the process stripped from the bill a provision that would allow parents to use education-savings plans to pay for some home-schooling expenses.
Retirement policy has long been a priority for Ways and Means Chairman Richard Neal, who took control of the tax-writing committee this year. Neal has said Thursday’s bill won’t be the last time he tries to work with Representative Kevin Brady, the senior Republican on the committee, to modify the retirement system.
“This is the most substantive promotion of retirement savings in the last 15 years,” Neal said on the House floor before the vote.
However, at least some of the committee’s work for the remainder of 2019 is likely to be overwhelmed by the higher-profile battle for President Donald Trump’s tax returns. Neal helms one of only three committees that the law empowers to request individual taxpayers’ information. Neal invoked the power last month and followed with a subpoena this month. So far Treasury Secretary Steven Mnuchin hasn’t complied on the grounds that the Department of Justice says the request violates the Constitution. That means Neal will likely take the executive branch to court.
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