HOUSE VOTES TO MAKE CHARITABLE IRA DEDUCTION PERMANENT
The House of Representatives voted to make the tax deduction for charitable contributions from IRAs a permanent part of the tax code. The deduction allows taxpayers age 70½ and older to make up to $100,000 in qualified charitable contributions from their IRAs and Roth IRAs annually, without having to count the contributions as income. Contribution amounts can be counted toward the annual minimum distributions required for traditional IRA account holders.
The provision is part of a broader bill dealing with charity-related tax provisions that also calls for making two other deductions permanent, rather than reapproving them annually as “extenders.” Though there is broad bipartisan sentiment in favor of the deduction, only 39 Democrats voted for the measure signaling the potential roadblocks ahead in the Senate. Many Democrats, along with President Obama, insist that the deductions need to be offset by tax increases or reduced spending elsewhere.
SAVINGS & RETIREMENT IN CROSSHAIRS AS TAX AND BUDGET BATTLE TAKES SHAPE
Barely a month into the new Congress and it has become clear that savings and retirement issues will be at the center of some key battles between the President and Congress over the course of 2015. With many proposals that would mean big changes for the way Americans save and invest, The Savings Coalition of America is gearing up for an all out blitz to educate policymakers and advocate for sound savings policy.
“Policies that promote and incentivize savings don’t just provide financial security for individuals, they help form the underpinnings of a strong national economy,” said Kathy Hamor, Executive Director of the Savings Coalition.
In January, ahead of his annual State of the Union address, President Obama laid out a vision for tax reform that includes an increase in the capital gains tax and “Auto-IRA’s.” But it was his proposal to tax earnings on college savings accounts, or “529s,” that produced shockwaves. Though the idea was quickly dropped, the fact that it is was even considered reverberates, with many concerned about what it portends for Roth IRAs which are also funded with after-tax contributions. Another significant proposal that was announced was placing a cap on contributions to retirement accounts.
Among Obama’s specific proposals are:
Meanwhile, in Congress, Republicans are sketching out their own plans for tax reform, which may overlap only minimally with the President’s plans – perhaps including expanded tax credits for middle and lower income taxpayers. Chairman of the House of Representatives Committee on Ways and Means, Paul Ryan (R-WI) has hit the ground running, already moving on several bills to make certain tax provisions permanent, such as deductions for charitable contributions from IRAs. Ryan also plans on taking up a comprehensive tax reform effort despite the Administration’s desire to focus more specifically on reforming the corporate tax structure. While calling the President’s proposals “misguided” Ryan reiterated a desire to work with Obama “to find common ground.”
With a different political dynamic in the Senate, the new chair of the Finance Committee, Orrin Hatch (R-UT), is moving more deliberately, but definitively. Taking to the Senate floor in December he outlined seven principals for comprehensive tax reform which he declared “…is no longer optional… it is essential.” Among the seven principals, he spoke to the importance of promoting savings and investment. Hatch and the panel’s top Democrat, Ron Wyden (D-OR) have created five working groups to lay the groundwork for tax reform. The bipartisan working groups, including one focused on savings and investment, will work with the nonpartisan Joint Committee on Taxation to produce “an in-depth analysis of options and potential legislative solutions” and recommendations by the end of May.
Whether or not common ground can be found, tax reform is near the top of the agenda in Washington in 2015, and savings and investment policies are “on the table.” The Savings Coalition will be working diligently to ensure that the sound savings policies Americans deserve and need for financial independence and security are included.
The Savings Coalition of America was organized in 1991 to support to increase personal savings in the United States. Its mission is to promote and advance policies that will increase the level of personal savings in the United States as well as protect current policies that encourage personal savings. The Savings Coalition also supports increasing awareness of the importance of saving by Americans.
The members of the Savings Coalition represent a wide variety of private interests including engineering, consumer groups, home-building, realtors, tangible assets, trust companies, health care industry, banking, financial services, education, insurance, securities and business groups.
Everyone understands how saving can give people a sense of security and independence. Personal saving is crucial to planning for life’s expected and unexpected events, and for building financial security and freedom. But personal savings is more than just personal – it is fuel for America’s economic engine. Read more...