Pub. 1 2020 Issue 3

www.cbak.com 14 In Touch ability to self-correct without penalty. • Modify RMD rules to better accommodate the use of lifetime income investments, including accelerating distributions and lump- sum payments. • Allow claiming of the IRA and employer plan contribution credit (“saver credit”) by taxpayers filing IRS Form 1040-EZ (used by filers with no dependents) rather than the longer Form 1040. • Substantially raise the maximum amount of a qualifying longevity annuity contract (QLAC) — an amount that is excluded from RMD calculations. • This bill also includes multiple employer plan provisions. Veteran Retirement Legislation Pair Returns U.S. Senators Rob Portman (R-OH) and Ben Cardin (D-MD) have renewed a legislative partnership that began more than two decades ago, when both were congressmen in the U.S. House of Representatives. Both have since been elected to the Senate from their respective states. Their Retirement Security and Savings Act (RSSA) was introduced in May 2019. It is a little-changed version of legislation the senators introduced in December 2018, as the 115th Congress drew to a close and all unpassed bills then died. In 2019 the SECURE Act had the limelight, and RSSA had to wait in the wings. (Some elements of RSSA were, in fact, implemented by the SECURE Act). The Portman-Cardin proposal is wide in scope. But prominent among its provisions are enhanced tax incentives for saving, preservation of retirement accumulations, reducing penalties for inadvertent taxpayer mistakes, and enhanced portability of retirement benefits. Following are a sampling of provisions in their proposal, with particular emphasis on IRAs and IRA- based employer plans. Some provisions resemble or align with Rep. Neal’s legislative proposals. RSSA • Exempt small IRA and retirement plan balances ($100,000 or less, in aggregate) from RMD requirements • Increase the RMD onset age to 75 (the SECURE Act raised the RMD age from 70½ to 72). • Permit annual IRA catch-up contributions to be indexed for cost- of-living adjustments (the current IRA catch-up amount is $1,000, available for those age 50 and older). • Allow nonspouse beneficiary indirect (60-day) rollovers between IRAs or between IRAs and employer plans. • Liberalize and make refundable the saver credit for IRA and employer plan contributions. • Permit rollovers from Roth IRAs to employer plans that have a designated Roth account (Roth 401(k)) feature, with Treasury regulatory guidance issued to accommodate. • Expand SIMPLE IRA options to allow Roth-type employee deferrals and more generous employer contributions. • Exempt Roth accounts in employer plans from RMD requirements (like Roth IRAs). • Reduce the excise taxes for missed RMDs (now 50%) and — in some situations — for excess IRA contributions. • Substantially raise the maximum amount of a QLAC — an amount that is excluded from RMD calculations. • Treat certain student loan repayments as qualifying for an employer contribution to that individual’s at-work retirement plan. • Allow individuals to take tax-free qualified charitable distributions (QCDs) from employer plans, not just IRAs. • RSSA also includes multiple additional employer plan provisions. Election Year Wild Card Timing is everything, some say, and this axiom applies as much to legislation as it does to other things. In a Presidential election year like 2020, the focus of lawmakers is increasingly drawn toward the election, and the chances of major legislation being passed becomes less clear. It should be remembered, however that many had all but given up hope that significant retirement enhancement would happen in the 2019 session of Congress; yet that was the ultimate outcome. The lawmakers behind the above-described proposals are experienced and committed to enhancing the retirement system. In gauging their chances of success, “never say never” would be well-chosen words to live by in 2020.  Ascensus will continue to assess the progress of this proposed legislation and any related guidance. Visit Ascensus.com for future updates. Mike Rahn Timing is everything, some say, and this axiom applies as much to legislation as it does to other things. In a Presidential election year like 2020, the focus of lawmakers is increasingly drawn toward the election, and the chances of major legislation being passed becomes less clear.