Tax Bills Would Affect IRAs, Pensions
The political dynamic at play between the House of Representatives and the Senate regarding the annual federal spending bills also applies to taxes, as Congress considers tax legislation that includes provisions impacting IRAs and multi-employer pension plans.
As with federal spending bills, the U.S. House and Senate are maneuvering to gain leverage for negotiations on tax legislation that will likely take place after the 2014 mid-term elections. At issue in the tax debate is a host of expired tax provisions (the so-called ‘tax extenders’) that need to be addressed before the 2014 filing season beginning in January 2015. Two provisions being considered in this debate would affect retirement plans.
The Senate Finance Committee by voice vote cleared a tax package that extends 54 expired provisions for two years. Included in the Senate package is the IRA charitable rollover provision and a one-year prospective extension of the PPA funding rules for multiemployer pension plans. The legislation is currently pending on the Senate floor, where is it being held up due to a procedural fight on amendments.
The House Ways & Means Committee has taken a radically different approach on tax extenders, choosing to consider only certain tax extenders on an individual basis. In addition, these bills would permanently extend the provision. A permanent extension of any of these tax provisions, while costly when enacted into law, increases the likelihood of tax reform because it changes the baseline from which tax legislation is scored (so if more temporary tax provisions were made permanent, it would “cost” less to lower tax rates, allowing more popular and expensive tax breaks to be held harmless in any reform effort).
The House Ways and Means Committee has begun moving these individual bills through the committee and to the House floor on a largely party-line basis. During the week of May 25, the Committee considered the “second tranche” of these individual measures. Included in the "second tranche" is a bill sponsored by Reps. Aaron Schock (R-Ill.) and Earl Blumenauer (D-Ore.), that would make the IRA charitable rollover provision permanent. It remains to be seen how this process will play out, but the ASPPA GAC team will continue to monitor any developments and we will keep you updated.
Andrew Remo is ASPPA's Government Affairs Manager.