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bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Senate Committee on Finance
  • The house Passed September 27th, 2018
    Roll Call Vote 240 Yea / 177 Nay
      house Committees
      House Committee on Education and the Workforce
      House Committee on Ways and Means
    IntroducedSeptember 10th, 2018

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What is it?

This bill — the Family Savings Act — would aim to expand opportunities for businesses and workers to participate in retirement plans, and encouraging the use of new and existing tax-preferred savings accounts. A breakdown of its various provisions can be found below.

Savings Accounts

This section of the bill would create a new tax-preferred Universal Savings Account (USA), which would have an individual annual contribution cap of $2,500. Distributions from a USA would only count as taxable income if they were made in the same tax year as that income was contributed, otherwise distributions wouldn’t be penalized. Contributions in excess of the cap would be taxed, while the tax exemption would be eliminated in the event of prohibited transactions.

Section 529 education savings plans would be expanded to allow the distribution of funds for paying apprenticeship fees as part of a registered apprenticeship program, homeschooling expenses, or expenses that are in addition to tuition at elementary or secondary schools. Up to $10,000 in aggregate funds from Section 529 plans could be used to pay principal or interest on student loans, which would count against the individual’s student loan interest deduction if they claimed it.

New and expecting parents (including adoptive parents) would be able to make penalty-free withdrawals of up to $7,500 from retirement accounts within one year of the child’s birth or legal adoption. They would then be able to make contributions to replenish those retirement funds in the future if they want, up to the amount of the withdrawal.

Other provisions of this section would:

  • Eliminate the maximum age rule for traditional IRA contributions, effective.

  • Allow employees with an annuity in a 401(k) or similar plan could transfer it to an individual retirement account (IRA) without paying taxes on the transferred amount.

Retirement Plans

This part of the bill would establish multiple employer plans (MEPs) with pooled plan providers, meaning that small businesses from different industries would be able to partner together to establish retirement plans that are less costly and burdensome to administer than a single-employer plan (known as an open MEP). Under current law, only closed MEPs are permitted, so participating employers have to share certain attributes like membership in a trade group or operations in a certain region.

Employees over the age of 70 ½ would be excused from having to take required minimum distributions (RMDs) from qualified retirement plans, such as 401(k)s or individual retirement accounts (IRAs) if assets in their combined retirement accounts is under $50,000.

Impact

American workers, particularly those near retirement or with new children; businesses, especially small businesses that’d join MEPs; and the federal government.

Cost

The CBO estimates that enacting this bill would reduce federal tax revenue by $21 billion over the 2019-2028 period.

More Information

In-Depth: Rep. Mike Kelly (R-PA) introduced this bill as part of the GOP’s Tax Reform 2.0 plan to help Americans save for retirement, their education, and starting families:

“With more than 60 percent of Americans not having enough savings to cover a $1,000 emergency expense, the passage of the Family Savings Act is especially critical. After all, real financial security is not about how much one makes but about how much one saves. With my bill’s provisions, families and workers will have new, much fairer ways to prepare for the future and be able to tackle whatever life may throw their way.”

House Democrats opposed this bill, and the rest of the GOP's Tax Reform 2.0, with House Democratic Whip Steny Hoyer (D-MD) writing:

"Today, Ways and Means Republicans passed out of committee on a party line basis a second round of their dangerous tax scam, which would further bankrupt our children and grandchildren in order to provide even more tax breaks to the wealthiest in our country.  Their latest tax legislation would add $3 trillion to the deficit over a decade, even as Republican economic policies - including their first round of tax cuts - led the Congressional Budget Office to project trillion dollar deficits far into the future. Meanwhile, their promised massive economic growth and wage gains for middle class workers have not materialized, with wages still stagnating while businesses use their tax breaks to benefit shareholders through stock buy-backs."

This legislation passed the House Ways and Means Committee on a 21-14 vote and has the support of 29 cosponsors, all of whom are Republicans.


Media:

Summary by Eric Revell

(Photo Credit: iStock.com / BrianAJackson)

AKA

Family Savings Act of 2018

Official Title

To amend the Internal Revenue Code of 1986 to encourage retirement and family savings, and for other purposes.

    The more bodies you can rap up into a policy the better rate you can get. I belong to Kaisar Nothern Ca. My sister in law is Kaiser southern Ca. Because they have a larger group they have a better rate.
    Like (13)
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    GIVE US BACK OUR FUCKING SOCIAL SECURITY YOU GODDAMNED THIEVES!!!!
    Like (51)
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    If workers have trouble saving 1000.00, how are they going to save up to 2500.00 a year. The problem isn't ways to save, the problem is low wages to have the money to save. Does the Rep think that people are just not responsible and not saving their lush incomes? Shows how out of touch he is. People don't sane because they don't have any disposable income to save. Increase wages and you'll see people save.
    Like (18)
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    Republican bullshit! Lying thieving whores stop ripping off workers.
    Like (17)
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    The Devil is Really in the....Whole plan and not only the Details. Beware!
    Like (15)
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    Benefits of opening MEPs I can agree with. That should have been the entirety of this bill - the remainder is whimsical. $2500/year cap is insufficient. I can live with no penalties on distributions in the following year but $7500 I first year of child’s birth is also insufficient. This entire bill isn’t worth the cost. Also, we know these saving plan are more costly/not as beneficial to the average worker than previous systems of retirement planning.
    Like (7)
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    As the wife of a small business owner I would like for small businesses to have more ways to compete for top talent
    Like (6)
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    I interpret this bill as providing tax breaks on the smaller retirement saving plan. If I am correct this should be a definite yea. Too many times we protect the middle to high income with little regard for the little guy trying to save for their future.
    Like (5)
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    Getting “permission” from government is what is wrong here.
    Like (4)
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    Typical of the GOP, name a bill something that sounds wonderful but if you read the details, you'll find that it's the opposite.
    Like (4)
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    I oppose Republican bills.
    Like (3)
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    We don’t have enough money for this because Trump’s Bunch is spending us into bankruptcy. Making the Tax Cuts PERMANENT will finish us off. We’ll have to learn Russian.
    Like (3)
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    This is good sense legislation helping Americans. That's when we worry about the deficit? NO! Roll back the tax break to the 1% and big business. Stop these wars and stop giving the military more money than the ask for. Stop the socialists handouts to oil and pharmaceutical companies. STOP TRYING TO TAKE FUNDING FROM PROGRAMS THAT HELP SO MANY AMERICANS IN FAVOR OF YOUR SOCIALIST SUBSIDIZING OF THE 1% AND BIG BUSINESS!
    Like (3)
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    Low wages make it hard to start savings accounts. People need retirement money. I believe that fixing social security is more important.
    Like (3)
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    Promote education of individual financial skill and responsibility, rather than depending on other institutions to do it for us.
    Like (3)
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    Only if the CEO is required to make contributions that are are pooled with everyone else's contributions.
    Like (2)
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    Jut another example of the munificence of the Republican party along the same genius lines of making citizens play the stock market on their own if that's how they want to save. Social Security - if it needs fixing, fix it, but don't give me any of this silly individual savings accounts with stock market participation. Are you kidding me?
    Like (2)
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    This bill would not only make it easier and more cost effective for small businesses to set up retirement plans by pooling together, it’d help American families save for their education, new children, and retirement.
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    Suppose they take your funds and invest poorly? Or go bankrupt? We will lose it all
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    Not sure why ALL employers could not be considered a group for the best prices.
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