NAILBA Perspectives Perspectives Fall 2018 - Page 16

washington update House Members Hit Campaign Trail, Leaving Much to Do in November The House of Representatives left Washington September 28, freeing its members to head home to campaign ahead of the November 6 elections. House lawmakers finished a number of important initiatives—including government funding until at least December 7. But the House also left a number of high-profile issues, in- cluding three tax reform/cuts bills (see story below), for the lame duck session that starts November 13. The Senate left on October 12. B oth the House and Sen- ate approved government spending legislation that funds more than 2/3 of the federal government for all of fiscal year (FY) 2019, and the rest through December 7, 2018. For the first time in years, Congress agreed on funding for the Departments of Health & Human Ser- vices (HHS), Labor (DOL), Education, and Defense. The agreement resulted in part from lawmakers’ decision to leave out of the funding bill conten- tious policy riders—provisions that trigger partisan struggle on such high-profile issues as abortion and Affordable Care Act (ACA) regulation. Also contributing to the successful compromise was the decision to com- bine HHS/DOL and Defense funding in just one bill. Where policy disagreements could not be resolved (or ignored), Con- gress deferred the dispute resolution until after the mid-term elections by approving temporary funding (at current year levels until December 7) for the parts of government that were not covered by full FY 2019 appropriations legislation. Between November 13 and December 7, the lame-duck 115th Congress will de- bate the most high-profile of these issues – funding of the southern border wall – in the Department of Homeland Security (DHS) bill. 16 perspectives FALL 2018 Prospects: It will be the current Congress (not the Members who will be elected November 6) that deals with the lame duck session issues. Those issues are expected to be contentious, with some key law- makers suggesting there may be a pre-Christmas partial government shut- down over issues (like funding the southern border wall) that have so far resisted successful resolution. As a result, the November 13-Decem- ber 7 lame duck session will likely be busy, with the potential for unantic- ipated issues popping up throughout the session. House Passes Three Tax Reform Bills On September 27 and 28, the House of Representatives passed three tax reform bills. The bills make perma- nent current individual tax rates, the pass-through business income deduction, and the doubled estate tax exemption; expand open multi- ple employer plans (MEPs) and make other retirement and non- retirement savings tax rule changes; and permit investors in start-up businesses to qualify for more tax incentives. The three bills now await Senate action. They include: • The House passed the Protecting Family and Small Business Tax Cuts Act (H.R.6760) on Septem- ber 28 by a vote of 220 to 191. It eliminates the Tax Cuts and Jobs Act’s (TCJA’s) expiration dates for individual income tax rates. It also makes permanent, by eliminating the TCJA expiration dates, the sec- tion 199A pass-through business income deduction and the doubled estate tax exemption. Also made permanent in H.R.6760 is the in- crease in the standard deduction, the child tax credit, and the repeal of the individual minimum tax.  H.R.6760 also extends to 2021 the TCJA rule that makes unreim- bursed medical expenses deduct- ible to the extent they exceed 7.5 percent of adjusted gross income (AGI). Unless extended again, as of 2022 unreimbursed medical ex- penses will be deductible to the extent they exceed 10 percent of AGI.  The House-passed bill also makes permanent many of the TC- JA’s revenue- offsetting/rules-re- forming provisions that trigger a loss of tax incentives—including the repeal of the personal exemp- tion, the reduction in deductible mortgage interest to $750,000, the new $10,000 limit on the de- ductibility of state and local taxes (SALT), and others. • The Family Savings Act (H.R.6757) passed the House on September 27 by a vote of 240 to 177. The bill changes both retirement and non-retirement savings rules. It includes 11 of the 33 provisions contained in the NAIFA-support- ed Retirement Enhancement and Savings Act (RESA). Among the RESA provisions in H.R.6757 is an expansion of multiple employer pension (MEP) plans, including re- peal of the “one- bad apple” rule. (The one bad apple rule would dis- qualify the plan for all employers if one employer had a disqualify- ing event; repeal of it would mean only the employer responsible for the disqualification would be im- pacted.) It also would expand the rules for participating in a MEP (the nexus rules) so that even employers with no common busi- ness connection could adopt into a multiple employer plan.  The bill also eliminates the age restriction on making contribu- tions to IRAs, eliminates the mini- mum required distributions rule for aggregated account balances of less than $50,000 (indexed), and provides fiduciary liability protec- tion for plan sponsors that offer a lifetime annuity option in their plans’ menu of investment choices.  H.R.6757 does not include the lifetime income disclosure (LIDA) rules supported by NAIFA—i.e., the provisions that would require employers to show their plan par- ticipants how much monthly life- time income could be generated by the amount they have in their retirement plan accounts. Nor does the contain the “stretch IRA” pro- vision that would require distri- bution (and tax paid) within five