The Senate Finance Committee on September 21, 2016, approved the Miners Protection Act of 2016, to provide the transfer of funds to pay health benefits to retired miners and prevent insolvency of the United Mine Workers of America pension fund; and the Retirement Enhancement and Savings Act of 2016, a collection of several provisions including those to expand access to multiple employer plans (MEPs) and to improve the portability of lifetime income options.

The miners bill, which was approved 18-8, would be offset by an extension of customs user fees. Senator Mike Enzi (R-WY) spoke out about the miners protection piece as setting a dangerous precedent for other underfunded plans by rescuing a plan using taxpayer dollars.

The broader retirement bill, approved 26-0 in an off-the-floor Senate vote following the public markup, includes a collection of bipartisan, largely noncontroversial proposals to expand retirement savings and improve pension and retirement plans. Many of the proposals have been developed over a period of years and have enjoyed strong support in Congress.

The "open MEPs" section added in the Chairman's modification to the original mark allows for multiple employer plans to be open to participation by unrelated employers, which Chairman Orrin Hatch (R-UT) said has been a priority of Senator Mike Enzi (R-WY) and other Committee members. The Obama administration included a very similar open MEPs proposal in its most recent budget. The Committee-approved version would be effective beginning in 2020.

Other member proposals that were added in the modification include:

— the Lifetime Income Safe Harbor provision advocated by Senators Maria Cantwell (D-WA) and Johnny Isakson (R-GA);

— Senator Isakson's Lifetime Income Disclosure provision, requiring such disclosures to be included in quarterly pension benefit statements;

— A proposal offered by Senators Ben Cardin (D-MD) and John Thune (R-SD) to allow IRAs to hold S corporation stock;

— A proposal offered by Senators Richard Burr (R-NC) and Robert Casey (D-PA), the ABLE to Work Act, to allow contributions to and a retirement savings tax credit associated with the accounts for the care of family members with disabilities; and

— the Empowering Employees through Stock Ownership Act by Senators Mark Warner (D-VA) and Dean Heller (R-NV), intended to ease the tax implications for employees of non-public firms through provisions like extending the time period in which employees are required to pay tax upon exercise of stock options. A nearly identical proposal sponsored by Rep. Erik Paulsen (R-MN) has been approved by the House Ways and Means Committee.

The Finance Committee offset the $5.7 billion cost of the retirement provisions by limiting the use of inherited IRAs, generally requiring plan or IRA distributions to be made within five years of the death of the account owner. The proposal exempts the first $450,000 of IRA or 401k-type account balances, and would grandfather certain annuity arrangements. The bill would also modify hardship withdrawal rules to allow earnings on elective deferrals under a 401(k) plan, plus qualified nonelective contributions and qualified matching contributions (and attributable earnings) to be distributed.

Senators also used the markup to call attention to other priorities. Ranking Member Ron Wyden (D-OR) discussed a proposal from his recently-released discussion draft on retirement issues that would allow repayment of student loans to count for purposes of earning employer matching contributions to a 401(k) plan. Senator Heller expressed his hope that "in the coming year we can work together to permanently repeal the Cadillac tax." Senator Thomas Carper (D-DE) mentioned the need to address extensions of tax credits for energy technologies said to be inadvertently left out of the 2015 tax legislation.

Chairman Hatch also mentioned that a handful of measures, including Sen. Cantwell's Tribal Pension Parity Act, Senator Cornyn's proposal regarding tax benefits for members of the Armed Forces serving in the Sinai Peninsula, and two ABLE Act-related proposals offered by Senators Burr and Casey, while not included in the mark, would be discharged from the committee and able to proceed to the Senate floor where they could be considered under unanimous consent.

Attached are statements by Chairman Hatch and Senator Wyden, along with Joint Committee on Taxation JCX-87-16: Description Of The Chairman's Modification Of The "Retirement Enhancement And Savings Act of 2016" and JCX-88-16: Estimated Revenue Effects Of The Chairman's Modification Of The "Retirement Enhancement And Savings Act Of 2016," Scheduled For Markup By The Committee On Finance On September 21, 2016.

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ATTACHMENTS

Chairman's Modification

Executive Session

Hatch Statement

JCX8816

Wyden Statement