As President’s Day approaches we take a look at President Obama’s final budget proposal which contains 15 provisions related to retirement accounts. All but one of the proposals are simply a repeat of those proposed last year none of which were enacted. The only new proposal would allow certain employers to pool resources to create multi-employer (defined contribution) retirement plans which would create economies of scale and encourage more small business to participate.
Below is a list of the proposals but if you would like to read a full explanation you can go to the (Ed) Slott Report at https://www.irahelp.com/slottreport/final-obama-budget-proposal-heavy-retirement-account-changes-again.
#1 – Allow Unrelated Employers to Participate in a Single Multi-Employer Defined Contribution Plan
#2 - Eliminate the Special Tax Break for NUA
#3 - Limit Roth Conversions to Pre-Tax Dollars
#4 - “Harmonize” the RMD Rules for Roth IRAs with the RMD Rules for Other Retirement Accounts
#5 - Eliminate RMDs if Your Total Savings in Tax-Favored Retirement Accounts is $100,000 or Less
#6 - Create a 28% Maximum Tax Benefit for Contributions to Retirement Accounts
#7 - Establish a “Cap” on Retirement Savings Prohibiting Additional Contributions
#8 - Create a new “Hardship” Exception to the 10% Penalty for the Long-Term Unemployed
#9 - Mandatory 5-Year Rule for Non-Spouse Beneficiaries\
#10 - Allow Non-Spouse Beneficiaries to Complete 60-Day Rollovers for Inherited IRAs
#11 - Require Retirement Plans to Allow Participation of Long-Term Part-Time Workers
#12 - Require Form W-2 Reporting for Employer Contributions to Defined Contribution Retirement Plans
#13 - Mandatory Auto-Enrollment IRAs for Certain Small Businesses
#14 - Facilitate Annuity Portability
#15 - Eliminate Deductions for Dividends on Stock of Publicly-Traded Companies Held in ESOPs
These proposals are just that; proposals, many of which most likely will not be enacted however it does give us a sense of what lawmakers may be going after in the coming years.