There is a possibility that the United States House could bring three bills to the floor in the near future. These three bills are H.R. 6757, H.R. 6760, and H.R. 3798. H.R. 6757 is the Family Savings Act bill, H.R. 6760 is the Protecting Family and Small Business Tax Cuts Act bill, and lastly, H.R. 3798 is the “Save American Workers Act of 2017” bill. Although these bills may be brought up in the House, it is unlikely that anything regarding them will become law before the midterm elections in November according to analysts at Lockton Companies.
Let’s start with the Family Savings Act. This act is intended to boost retirement savings. It would also make it easier on small employers by allowing employers in different industries to partner with one another in a common multiple-employer plan (MEP) rather than using the pricey and burdensome single-employment plane.
Right now, only closed MEPs are allowed which means employers that use them have to share common organizational relationships like memberships in trade associations within a specific geographic region.
The Family Savings Act would also excuse employees over the age of 70 and ½ from having to take required minimum distributions (RMDs) from qualified retirement plans like 401(k)s or individual retirement accounts (IRAs) if their assets do not exceed $50,000.
This plan would also allow people to access their 401(k)s or accounts like it in the case of a new child. It could be a new biological child or adopted child, but the accounts could be replenished in the future, and no penalties would be applied.
The bill would allow employees who currently have an annuity in their 401(k)s, or plans similar to it, to transfer it to an IRA without paying taxes on it. However, it does not protect you from liability is the plan sponsors “prudently select” an annuity provider.
The Family Savings Act would also expand on section 529 education account to help cover apprenticeship fees that are applied when learning a trade, help cover the cost of homeschooling and aid in paying off student debt.
Those are just a few important pieces of the Family Savings Act, but it also includes things like relief for denied-benefit pension plans and universal savings accounts.
H.R. 6760: Protecting Family and Small Business Tax Cuts Act
The Protecting Family and Small Business Tax Cuts Act would make permanent provisions for individuals and pass-through entities in the Tax Cuts and Jobs Act.
These provisions include:
- Lower rates of 10%, 12%, 22%, 24%, 32%, 35%, and 37%.
- Doubling of standard deduction to $12,000/$24,000 for single or joint filers.
- Doubling Child Tax Credit to $2,000 with up $1,400 refundable.
- The retention of popular deductions like mortgage interest ($750,000 for new homes), state and local taxes (SALT) (capped at $10,000), medical expenses, and charitable deductions.
- 20% tax deduction for small business owners.
This act would extend the reduction of the tax thresholds above, which unreimbursed medical costs may be lessened, so that this reduction will apply to the taxable years from after December 31st, 2016 to January 1st, 2021. The reduction would be from 10% to 7.5 % AGI (adjusted gross income).
H.R. 3798: Save American Workers Act
This bill focuses on amending the Internal Revenue Code to change the definition of a “full-time” employee. This is for the purpose of the employer mandates to provide minimum essential health care coverage under the Patient Protection and Affordable Care Act (ACA) from an employee who works at least 30 hours a week to an employee who works at least 40 hours per week.
So, how could these bills affect you, as an agent, and your clients?
Comment your thoughts below!
