Earlier this week, I told you House Speaker Nancy Pelosi had language allowing homeschooling families to use 529 education savings accounts removed from H.R. 1994, which makes changes to rules governing retirement savings accounts.
She also added a provision to correct a mistake in the tax code that taxes payments made to families who lost a loved one in combat at a higher level than should be.
This underhanded trick means representatives who voted “no” to protest the homeschooler provision were also forced to vote against lowering taxes for “gold star” families.
The underlying bill makes some positive changes in the tax code. However, it assumes that “encouraging” people to save for retirement is a proper role of government. The truth is, a question of how much, if anything, a person should save for retirement depends on each individual’s unique circumstances, so they cannot be dictated or even “encouraged” by government. Some individuals may have more immediate needs for their money, while others may want to save for other purposes, like their children’s education. In a free society, they should have that choice.
One disturbing part of the bill is that in order to “offset” the revenue loss from some of the tax changes, it allows the IRS to share tax data for the purpose of improving enforcement of the “heavy vehicle use tax.” This tax is imposed on “heavy” vehicles which are involved in transporting goods. Liberty activists should be concerned anytime the IRS is authorized to share any type of tax data with another federal agency.
Here are some of the most important provisions of H.R. 1994:
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Makes it easier to create multi-employer plans
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Provides a $500 tax credit to small businesses who set up 401(K) and IRA plans with automatic enrollment
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Treats taxable tuition and stipend payments as compensation for purposes of determining IRA contributions
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Repeals the maximum age limits for IRA contributions allowing older people to make contributions
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Makes plans portable so they follow workers when they change jobs
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Allows long-term, part-time workers to participate in retirement savings plans
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Allows penalty-free withdrawals to pay for expenses associated with birth or adoption
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Increases the age at which people must begin making distributions from IRAs to 72
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Extends the time employers have to open a retirement fund for their employees and have it count in the current taxable year
In order to “raise revenue,” the bill increases penalties for failure to file returns on time and changes the rules regarding distributions of retirement funds when the retiree dies.
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