NTF issue paper: cong152.doc. 10-18.
NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:
FAMILY SAVINGS ACT WILL HELP NEBRASKA FAMILIES.
BACKGROUND. This bill is the 2nd in a series of 3 bills promoted by conservative congressmen to continue the tax relief efforts of President Trump. This bill means to offer financial security to Nebraskans and other Americans who have difficulty saving sufficient funds for emergencies and will allow them to better prepare for the future by saving more and earlier. 21% of Americans have no retirement savings, and two-thirds of people with a savings account or plan believe their funds will evaporate too soon during retirement years.
THE BILL. HR 6757, known as the Retirement Enhancement & Savings Act and sponsored by Rep. Mike Kelly (PA.), is awaiting full House approval after the Ways & Means Committee advanced the bill. The bill would expand retirement opportunities for small businesses by creating Open Multiple Employer Plans (MEPs) by which groups of businesses could cooperate in retirement planning. Increased is the start-up tax credit for small businesses that create a plan and grant an additional credit, if a plan adopts auto-enrollment. HR 6757 would simplify portability of lifetime income investments in retirement plans, repeal the maximum age for contributing to a traditional IRA, and permit loans from qualified employer-provided plans through credit cards. Presently, IRA owners cannot make additional contributions beginning in the year they turn 70 1/2. HR 6757 retains a provision that offers relief to frozen defined benefit plans. Personal retirement savings accounts like 401(k)s and IRAs are crucial for personal retirement savings, because they shield investments from double taxation and thus encourage people to save for their own retirement. Sadly, many Americans, especially those employed by small businesses, do not take advantage of these plans because of their complexity and high compliance costs. Also, a new provision that exempts from required minimum distribution rules individuals whose aggregated account balances total less than $50,000. The original Trump tax cut bill included a limit of inherited IRAs, now erased from the new bill. Also removed is the current 10% cap on contributions in auto-escalation arrangements. The bill includes several family-friendly savings items. Universal Savings Accounts would permit annual cash contributions up to $2,500, indexed for inflation, earnings not taxed as gross income of an individual. These accounts not reserved strictly for retirement. Holders could remove distributions at any time for any purpose. Section 529 college savings plans expanded to cover apprenticeships, homeschooling expenses, and student loan repayments. Qualified are expenses for books, materials, fees, academic tutoring, and special ed services at elementary or secondary schools. The bill permits up to $10,000 in lifetime distributions to pay principal or interest on qualified education loans. These reforms help parents and students pay for education options outside the traditional public school system, giving Americans more choice in their education. The bill allows penalty-free withdrawals from qualified retirement plans for expenses concerning birth or adoption of a child in the first year. Amounts that one can withdraw penalty-free capped at $7,500. Families would gain easier access to their savings to support affordable and sustainable parental leave with penalty-free withdrawals from IRAs or 401(k)s. Residents in Canada and Great Britain successfully have utilized such accounts, which could allow Americans to protect more savings from taxation without strings attached. The bill proposes a clarification to the expanded child tax credit by stating that, to claim this credit, a taxpayer identification number (TIN) is necessary for a non-child dependent. A Social Security number or individual taxpayer ID number (ITIN) could suffice.
TAKE ACTION NOW. HR 6757 will guarantee increased savings opportunities for Nebraskans for retirement and educational purposes. Failure of this bill will mean erasure of several key points of the first Trump tax relief bill. Contact your representative today to co-sponsor and/or support this bill. Email netaxpayers@gmail.com for congressional office contact information and join the NTF Congress Watch Project.
Research, documentation, and analysis for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted by Nebraska Taxpayers for Freedom, with express prior permission granted for its use by other groups in the NE Conservative Coalition Network. 10-18. C