Markup of Highway Bill Sets Stage for Retirement-related Raisers
The Senate Finance Committee met June 26 to consider a modified chairman’s mark of revenue raisers to pay for an extension of the highway trust fund through the end of the year. The hearing adjourned with no action, but with the stated intention of reconvening to mark up a proposal early in the week following the July 4 recess. Committee Chairman Ron Wyden (D-Ore.) indicated that in the interim, he and ranking member Orrin Hatch (R-Utah) would be discussing the revenue provisions with House Ways and Means Chairman Dave Camp (R-Mich.) with the goal of reaching common agreement.
Although no action was taken June 26, the modified mark includes the retirement savings revenue raisers that will be on the Senate’s side of the negotiating table. There were two provisions:
- the so-called “stretch IRA” provision that would require distribution from any type of tax-favored retirement plan (including defined benefit plans) within five years of death where payments are made to anyone other than a qualified beneficiary; and
- a provision that would permit normal retirement age to be defined as 30 years of service for plans that already include such a provision.
The 30-year normal retirement provision would only be available to those employed by the plan sponsor before Jan. 1, 2017. A qualified beneficiary for the distribution upon death provision is a spouse, another beneficiary who is not more than 10 years younger than the deceased account holder or who is disabled or chronically ill, or a minor child. The original chairman’s mark included a provision that would have accelerated the required beginning date for individuals who become 5-percent owners after the year they attained age 70½ but before retiring, but that provision was dropped in the modification to the mark.
Notably absent from the proposed revenue raisers was an extension of the MAP-21 interest stabilization provisions and PBGC premium increases, but that is no guarantee one or both will not be part of an agreement between the House and Senate. A new proposal for extending unemployment benefits released by Sens. Jack Reed (D-RI) and Dean Heller (R-Nev.) on June 25 includes the MAP-21 raiser, but is not expected to go any further than the last proposal to extend those benefits.
Judy Miller is ASPPA’s Director of Retirement Policy.