House votes to boost retirement savings

The House on Thursday passed a bipartisan bill aimed at boosting retirement savings that also fixes an issue with the GOP tax law.

The bill, known as the SECURE Act, passed by a vote of 417-3. The three lawmakers who voted against the bill were GOP Reps. Justin Amash (Mich.), Thomas Massie (Ky.) and Chip Roy (Texas).

The bill includes a number of provisions designed to encourage businesses to offer retirement plans and to make it easier for people to save for their retirements.

These include provisions that would make it easier for small businesses to join together to offer retirement plans, treat graduate students’ stipends as compensation for purposes concerning individual retirement accounts (IRA), allow long-term and part-time workers to participate in companies’ 401(k) plans, and eliminate the age maximum for contributing to IRAs.{mosads}

“This is the most substantive promotion of retirement savings in the last 15 years,” said House Ways and Means Committee Chairman Richard Neal (D-Mass.).

The bill also would reverse changes that the GOP tax law made to a tax on children’s unearned income known as the “kiddie tax.”

Republicans aimed in their 2017 law to simplify the kiddie tax, which was originally created in the 1986 tax law to prevent wealthy people from avoiding taxes. However, the changes unintentionally ended up raising taxes on certain income received by children, such as benefits received by the children of deceased military members and first responders.

“What this tax bill did to Gold Star families was wrong, but I’ve been heartened to see so many of my colleagues join me in a bipartisan effort to right this wrong,” said Rep. Elaine Luria (D-Va.), who has been a leader in the efforts to reverse the tax increase.

When the Ways and Means Committee approved the retirement bill in April, the bill included provisions that would allow 529 education savings plans to be used for homeschooling expenses and certain nontuition expenses related to K-12 education. But those provisions were removed.

Neal said earlier this week that the two 529 provisions were removed because a considerable number of Democrats objected to them, while Republicans attributed to removal to the desires of “special interest” teachers unions.

Republicans were disappointed by the removal of the 529 provisions, but nearly every GOP lawmaker still voted for the bill.

“I am very encouraged by the underlying bill we have in front of us,” said Ways and Means Committee ranking member Kevin Brady (R-Texas). “It will greatly benefit our workers. It deserves strong support.”

There is bipartisan interest in both chambers of Congress in passing legislation to increase retirement savings.

Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) have introduced a bill that has a number of similarities to the bill that passed the House, and Sens. Rob Portman (R-Ohio) and Ben Cardin (D-Md.) also recently introduced a package on retirement savings.

The Senate retirement bills don’t include the kiddie tax fix, but the Senate earlier this week passed a stand-alone bill to undo the tax increase on military survivor benefits received by children.

Updated at 11:54 a.m.