Has the news surrounding tax-reform left you worried about your employee benefits program? Check out this great article by Kathleen Coulombe from SHRM on what you should know about the potential over haul of our tax code and what it means for your employee benefits program.
As efforts to repeal and replace the Affordable Care Act continue to plod along in Congress, House and Senate tax writers have been working with the Trump administration to find a way forward on tax reform.
Hearings continue to take place, most recently last week with both the House Ways and Means Tax Policy Subcommittee and the Senate Finance Committee looking at a path forward on tax reform. One area Members of Congress are reviewing is the tax-favored status of employer-sponsored retirement and welfare benefits. The House Ways and Means Tax Policy Subcommittee hearing focused on individual reform, which frequently touched on retirement security. One of the key issues discussed during the hearing was shifting the way individuals plan and save for retirement from a traditional pre-tax 401(k) account to an after-tax Roth model (aka “Rothification”). While hearing panelists noted that moving individuals saving for retirement to an after-tax 401(k) model would generate additional tax revenue for the U.S. Government, it could also disrupt the current retirement system.
SHRM believes a comprehensive employer-sponsored benefits package is a key component that employers use to attract and retain top talent. Two of the most widely utilized benefits are employer-provided health care and retirement plans. SHRM believes tax incentives should be used to expend access to and participation in health care and retirement savings plans.
The SHRM-led Coalition to Protect Retirement has expressed concerns to congressional members about moving individual retirement to an after-tax approach, as we believe it will undermine savings for retirement.
While tax reform legislation is not expected to be released until the fall, a set of principles will be released prior to the House adjourning for its August recess.
In the absence of a comprehensive tax reform plan moving ahead, there remains the strong possibility that a bill aimed strictly at tax cuts could be an alternative and could move as soon as members return to Washington in early September.
Aside from charting the course on tax reform, members must also fund the government for FY2018 by September 30 and increase the debt ceiling limit. While the House Budget Committee approved a FY18 budget resolution along party lines that contained tax reconciliation instructions, to move forward the resolution will have to pass both chambers and be signed by the president.
The resolution also requires congressional committees in both the House and Senate to achieve specific deficit reduction levels for 2018-2027 and submit recommendations by October 6, 2017. Given the challenges the budget resolution is facing and the fact that the House and Senate have not passed any of the 12 appropriations bills necessary to fund the government, a short-term continuing resolution will need to be enacted by October 1 to keep the federal government open and it could include an increase in the debt ceiling.
See the original article Here.
Source:
Coulombe K. (2017 August 1). Prospect for tax reforms remains unclear as mounting priorities compete for attention [Web blog post]. Retrieved from address https://blog.shrm.org/blog/prospect-for-tax-reform-remains-unclear-as-mounting-priorities-compete-for