New York Estate Planning & Elder Law Blog
It is notoriously foolish to take Congressional reports, proposed legislation, and similar matters as anything more than mere possibilities which may change federal law. For every piece of legislation that actually makes it into law, there are a hundred others that end up nowhere. Still, those who have an interest in certain issues, like retirement planning, may find value in examining the different ways that elected officials are considering modifying current rules.
For example, recently staff members of the U.S. Senate Finance Committee issued a report that outlines many different tax reform ideas that members of the committee will consider when they debate proposals this cycle. The report introduction explains that “The options described below represent a non-exhaustive list of prominent tax reform options suggested by witnesses at the Committee’s 30 hearings on tax reform to date.”
A full online copy of the document can be found online here.
What are some of the proposals that relate to retirement or long term financial planning?
At least nine specific tax changes related to retirement are outlined in the report. It is worth reviewing the full list to get an idea of the options on the table. Some examples of what it includes are:
* Minimize retirement saving tax preferences. This would eliminate or reduce tax breaks for things like 401(k)s and Individual Retirement Accounts. As an alternative, some propose expanded mandatory enrollment in Social Security. Other options might minimize “catch up” contributions for those who are over 50, speeding up the timeline for distribution of inherited IRAs, and repealing “non-deductible” IRAs.
* Alternatively, some propose increasing retirement saving incentives. These options might include expanding the “saver’s tax credit.” In addition, limits on contributions or restrictions on distributions may be eliminated.
* As a middle ground, another set of options would increase the “effect on tax expenditures for retirement savings on retirement security.” For example, this might include forcing certain employers to automatically enroll new employees in retirement plans unless they opt out. The goal could also be furthered by using more retirement savings for purchase of life annuities or long-term care insurance.
*Other options may prevent “leakage” of funds from retirement plans. This may be accomplished by tightening up withdrawal options or actually prohibiting withdrawal of a certain portion of funds before retirement altogether.
For advice on planning for retirement, creating an inheritance plan, and otherwise ensuring your long-term future is secure, consider contacting our NY attorneys for assistance.