U.S. House passes retirement tax bill, includes kiddie tax relief
House passes retirement tax bill, kiddie tax relief
The U.S. House of Representatives today passed, by a vote of 417 to 3, H.R. 1994, the “Setting Every Community Up for Retirement Enhancement Act of 2019” – the “SECURE Act.”
Read H.R. 1994
Previously, the Ways and Means Committee on April 2, 2019, reported to the full House the SECURE Act. The bill, as approved by Ways and Means, contained a number of retirement savings provisions, including:
- Increased required minimum distribution age from 70.5 years to 72 years after 2019 for certain taxpayers
- Accelerated required distribution rules for many designated beneficiaries
- Increased penalties for failures to file
- Portability of lifetime income options
A “manager’s amendment” made a number of changes to the bill reported by the Committee on Ways and Means, including:
- Removing provisions related to 529 plans and homeschooling and secondary school expenses, and
- Adding a provision to repeal “kiddie tax” measures under Code section 1(j)(4) that were added by the 2017 Tax Act so that unearned income of children would not be taxed at trust rates.
The kiddie tax change generally would be effective for tax years beginning after December 31, 2018, but a taxpayer could elect to apply it retroactively to tax years beginning after December 31, 2017.
Read the manager’s amendment [PDF 34 KB].
The Joint Committee on Taxation (JCT) released a revenue estimate of H.R. 1994 as considered by the House (including the manager’s amendment): JCX-23-19
House Ways and Means Chairman Richard Neal (D-MA) made the following statement after today’s vote by the House:
The legislation closes loopholes and makes it easier for small business employees, home care workers, and long-term part-time workers to save for retirement. … [and includes] a much-needed fix to reverse unfair and unexpected high taxes on Gold Star families, low-income scholarship recipients, and children of fallen first responders, among others.
The Senate yesterday passed a bill (S. 1370) to treat certain military survivor benefits received by a child as earned income for purposes of the kiddie tax. Read TaxNewsFlash.
The Senate has not yet acted on retirement tax legislation. Although it is not certain, the Senate might consider the House bill, possibly as soon as this evening.
For a bill to become law, identical legislation must pass both the House and the Senate and must be signed by the president.
© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.