Ways & Means Looking at Retirement ‘Reforms’?
House Ways & Means Committee Republicans have broken into tax reform working groups — and retirement is on the “menu.”
Ways & Means Committee Republicans have organized into informal tax reform working groups, but “not in the traditional sense,” Tax Notes
reports, citing committee chair Kevin Brady (R-Texas), who told reporters that members were on a very short timetable to look at issues raised by the House GOP’s “A Better Way” blueprint.
“As we’re working through what remains of the blueprint decisions, we asked a couple groups to bring us back recommendations fairly quickly on some items that needed some further thought,” Brady said. As examples, Brady cited, “How do you make it easier for people to save for retirement?” and “How can we make it simpler and more universal and broader used by Americans?”
Rep. Kenny Marchant (R-Texas) told Tax Analysts that the working groups would not be like the ones former Ways & Means Chair Dave Camp (R-Mich.) organized, adding that, “these are informal, inside the committee, [and] just for education so we can reach a consensus” and share it with the committee. No white papers or formal reports would be published by the groups, he said.
According to the report, these groups will work together until lawmakers can bring the committee to a consensus on their assigned issues, which would address the more technical aspects of the House Republicans’ blueprint plan.
Brady has previously invoked the spirit of the Tax Reform Act of 1986 as a model — a basis that should be of concern to those interested in encouraging retirement savings. Along with the changes in corporate and individual rates, defined contribution limits were cut by more than 70%, from $30,000 to $7,000, greatly diminishing not only the ability of individuals to save for retirement, but also the incentives for those who decide to establish and maintain these programs for others.
While the blueprint pledges to “continue the current tax incentives for savings,” it directs Ways & Means to “consolidate and reform the multiple different retirement savings provisions in the current tax code to provide effective and efficient incentives for savings and investment.” So while the current retirement savings vehicles — like the 401(k) — would not be removed from the tax code under the House Republican plan, those vehicles could be combined into one “cookie cutter” approach. That might, or might not, mean significant changes for the 401(k), but 403(b)s, and potentially even 457(b) programs could be subjected to changes that would render them more like their 401(k) brethren.