House GOP Pushes Back Tax Reform Unveil
Apparently we’ll have to wait another day to find out what House Republicans have in mind for tax reform.The Hill
reports that the GOP now says the bill will be released on Thursday, with what the report classified as “fights over possible changes to the tax status of 401(k) retirement plans and the state and local taxes deduction” at the center of the delay.
In a statement issued late Tuesday, Brady said: “Ways and Means Committee Members met tonight to discuss the work we are doing on pro-growth tax reform. In consultation with President Trump and our leadership team, we have decided to release the bill text on Thursday.
We are pleased with the progress we are making and we remain on schedule to take action and approve a bill at our Committee beginning next week.”
Hours before the decision was made to punt the release for a day, Ways and Means Committee Chairman Kevin Brady (R-TX) told reporters that he intended to release text of a bill Wednesday — but that it would not be a chairman’s mark. That would allow Brady to make changes to the text through the weekend ahead of a planned markup on Monday in the Ways and Means Committee. Bloomberg reports that Brady told reporters on Tuesday that he doesn’t plan to reduce the pretax contributions American workers can make to 401(k) retirement plans — “unless there's broad agreement” that a different system would lead workers to save more. “It will either be strengthened or enlarged or left pretty much as is,” Brady told reporters on Oct. 31.
Rothification — the limiting of the amount of 401(k) contributions that could be made on a pre-tax basis, the rest being made as Roth contributions — has long been rumored as a possible revenue-raiser for tax reform. Indeed, rumors that Republicans were considering limits on pre-tax contributions in 401(k) plans have been circulating for weeks, but came to something of a head last week along with rumors that 401(k) pre-tax savings would be limited to $2,400, with the rest considered Roth contributions. The $2,400 figure represents the median contribution made by all contributing workers in 2013, based on a government analysis of employee retirement plan contributions.
However, since then a series of published reports (most recently The Wall Street Journal
) had covered a report by the non-partisan Employee Benefit Research Institute using their Retirement Security Projection Model® (based on information from millions of administrative records from 401(k) recordkeepers), that found that more than half of current 401(k) contributors would be impacted by a $2,400 contribution Roth. Even at the lowest wage levels ($10,000 to $25,000), nearly 4 out of 10 (38%) of the 401(k) contributors would be affected by the $2,400 threshold.
Since those reports, a number of comments about the proposed changes have come from several in the GOP leadership, including President Trump who, just last week tweeted: “There will be NO change to your 401(k). This has always been a great and popular middle class tax break that works, and it stays!”
That was, of course, before Ways & Means Chairman Brady indicated that 401(k) limits were still on the table, to which the President seemed to suggest that it might be included in “negotiating.”
Apparently the “negotiating” is still underway.