House tax writers are preparing to move a bipartisan retirement savings package in the coming days and are eyeing the still-developing fiscal 2022 omnibus appropriations package as a way to send it quickly to the president’s desk.
The appropriations bill, which lawmakers are working to pass before a March 11 government funding deadline, “would be plan A” for passing the retirement legislation, Ways and Means’ top Republican, Rep. Kevin Brady of Texas, said in a brief interview.
“There’s no question, it would move across the floor with more than 400 votes and a lot of momentum, which is another option for us,” Brady said. “But obviously with this much bipartisan support, we think it fits.”
Ways and Means Chairman Richard E. Neal, D-Mass., said in a brief interview that his goal is to pass the package, which he authored with Brady, imminently. “I’m looking at options to get this done in the next few days,” Neal said. “My intention is to choose the right vehicle and just get it done.”
Neal noted that Ways and Means already unanimously approved the bill, which has 91 co-sponsors. He said it could move as part of a larger package, through a stand-alone floor vote or under suspension of the rules, a way to quickly move legislation that has broad bipartisan support through the House. “That’s how popular it is,” he said.
Legislation aimed at helping Americans save for retirement has a history of broad bipartisan backing. The bill from Neal and Brady builds on a 2019 law intended to boost savings, which passed as part of an appropriations package.
That law made it easier for small businesses to band together to offer pooled workforce retirement savings plans and for workplace plans to offer annuity options to employees, which are essentially insurance contracts that pay out regular distributions in retirement. It also allows gig workers to access 401(k)-style retirement accounts, among other provisions.
Neal and Brady’s latest measure would require most employers with 401(k)-type plans to automatically enroll employees unless they opt out, sweeten tax credits for startup firms that offer workplace savings plans, promote a benefit for low-income savers, allow more catch-up contributions for people in their 60s to put more into tax-beneficial savings accounts, and loosen rules to allow more annuity options.
It would also raise the minimum age when account holders must begin taking money out of their retirement plans from 72 to 75, acknowledging that Americans are living and working longer.
Several provisions would offer specified benefits, including those that would allow employers to match workers’ student loan payments with retirement plan contributions, military spouses to get earlier access to savings plans and for a program to locate unclaimed pensions.
The bill’s $27.2 billion in new incentives are fully paid for, according to the Joint Committee on Taxation. That’s with offsets that include a provision to divert more retirement contributions into after-tax Roth accounts, meaning the revenue is collected sooner and in some cases at higher tax rates, and one that would permit certain account holders to take money out early based on financial hardship, which would trigger taxes on the distributions.
Including the retirement bill in the spending package would mean adding a tax title, which could open up other tax issues that outside groups are lobbying to get into the package — like restoring a more generous tax break for research and development and reviving a pandemic relief credit for smaller businesses and nonprofits. But the outlook for those efforts was dimmer as of Wednesday.
Passing the retirement bill soon would also get it done before Brady retires at the end of the year.
Both Neal and Brady said they’re readying the retirement bill to pass. That includes some tweaks to satisfy senators.
Sens. Benjamin L. Cardin, D-Md., and Rob Portman, R-Ohio, have their own proposal to follow up the 2019 retirement law. It has some of the same provisions and addresses similar issues as the House bill but includes no offsets and has other differences. For example, the Senate bill would expand the credit for low-income savers, instead of simply directing the IRS to promote the credit.
Brady said Ways and Means is working in Senate feedback as they aim to move their measure, describing differences as “really solvable.” He said the committee is primarily working with the top tax writers on the Senate Finance Committee, Chair Ron Wyden of Oregon and ranking Republican Michael D. Crapo of Idaho, along with other senators who’ve championed specific provisions.
“It’s almost ready, like, any minute,” Brady said Wednesday evening.