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House votes to relax rules on IRA saving and withdrawing

The House Ways and Means Committee voted to approve legislation that would relax the rules for those saving for retirement.

The package of bills removes limits for the age at which taxpayers must stop contributing to individual retirement accounts and delays the age that taxpayers have to start withdrawing from those plans. Under current law, savers at age 70½ must stop putting funds in those accounts and are mandated to start drawing down that money.

The legislation also gives tax credits to small businesses automatically enrolling workers in retirement plans and makes it easier for companies to band together to offer joint retirement plans for their employees. The committee approval tees up the bills for a vote on the House floor before the Senate considers them.

“The time is ripe for these reforms,” said Representative Kevin Brady, the top Republican on the Ways and Means Committee. “I’m encouraged that we are moving early this Congress on bipartisan proposals.”

Representative Richard Neal, a Democrat from Massachusetts and chairman of the House Ways and Means Committee, at a committee hearing on Wednesday, Feb. 27, 2019. Photographer: Anna Moneymaker/Bloomberg
Representative Richard Neal, a Democrat from Massachusetts and chairman of the House Ways and Means Committee, center, speaks during a hearing with Robert Lighthizer, U.S. trade representative, not pictured, in Washington, D.C., U.S., on Wednesday, Feb. 27, 2019. Lighthizer said America is pushing for a trade deal with China that includes "significant structural changes" to the Asian nation's economic model. Photographer: Anna Moneymaker/Bloomberg

The top Republican and Democrat on the Senate Finance Committee, Chuck Grassley of Iowa and Ron Wyden of Oregon, have introduced similar legislation, increasing the chances the legislation could become law later this year. With Democrats controlling the House and Republicans with a Senate majority, these retirement issues are among the few tax policies that have the support to pass both chambers.

House Ways and Means Chairman Richard Neal said he plans to work with Brady to bring up another retirement bill that would simplify the retirement system before Congress adjourns in August. Retirement policy has been a longstanding priority for Neal, who has been keen to revamp IRAs, pensions and 401(k) plans ahead of other issues under the committee’s purview. Those other issues include requesting President Donald Trump’s tax returns and making legislative fixes to mistakes in the 2017 Republican tax law, neither of which have GOP support.

The committee also approved legislation that would establish an independent appeals office within the IRS, as well as bolster the agency’s cybersecurity systems and help the tax collector combat identity fraud, which has plagued the agency in recent years.