Here's How Retirement Savings Change Under Congress' Tax Cuts 2.0
The House, as part of its Tax Cuts 2.0 package, has passed a bill purportedly aimed at making it easier for Americans to save for retirement, Forbes writes.
The Family Savings Act of 2018, which must pass through the Senate to become law, includes 17 proposed changes to tax-advantaged savings accounts, according to the publication. Among them is a proposal to make it easier for smaller business to set up multi-employer retirement accounts and another proposal to exempt some older adults from the required minimum annual retirement account distributions, Forbes writes.
But the most significant part of the bill, according to the publication, is the proposed Universal Savings Account, which would allow savers to save a maximum of $2,500 annually, not exceeding their annual income, tax free. But unlike other tax-advantaged accounts already in existence, such as Roth IRAs, savers would be able to withdraw from the “USA,” as it was dubbed, for any reason at any time, Forbes writes. And unlike the individual tax cuts under the Tax Cuts and Jobs Act, which the divided House is trying to make permanent, the Family Savings Act stands a good chance of becoming law, according to the publication.
President Donald Trump’s administration has been looking for ways to revamp how Americans save for retirement. Last month, Trump directed the U.S. Department of the Treasury and the Department of Labor to review regulations with an eye to making it easier and cheaper for small businesses to set up multi-employer 401(k)-type plans while also making them clearer to understand for savers.
Lawmakers, meanwhile, have proposed other initiatives to boost Americans’ retirement security. Yesterday, Rep. Jim Himes, D-Conn., introduced a proposal for a portable retirement savings plan, according to a press release from the congressman’s office.
The Personal Retirement and Investment Account (PRIA) Act aims to fix what Himes says is a retirement savings system too reliant on employers, by letting savers contribute to the account whenever they have the resources, independently of their employment status, according to the press release.
Savers would also be able to roll their 401(k) and Roth IRA plans into the PRIA when they change jobs, or continue with whatever retirement savings account they prefer, Himes says. The press release does not specify whether PRIAs would be tax-advantaged.