Tax reform, including changes to retirement plans, health and welfare plans, and fringe benefits, is well underway as the House and Senate move forward with legislative efforts. On November 16, 2017, the House passed its tax reform bill, the Tax Cuts and Jobs Act. The Senate proposal released on November 9, 2017 was revised on November 14, 2017 and approved by the Senate Finance Committee late on November 16, 2017.
On November 2, 2017, the House of Representatives introduced its long-rumored “Tax Cuts and Jobs Act.” The House Ways and Means Committee approved various amendments to the bill on November 9, 2017 and sent the revised bill to the full House for a vote. The House passed the revised bill on November 16, 2017 (the “House Bill”).
Also on November 9, 2017, the Senate Finance Committee released its proposal for a tax reform bill, “Description of the Chairman’s Mark of the ‘Tax Cuts and Jobs Act.’” The Chairman’s mark was significantly modified on November 14, 2017 and was approved with minor additional modifications by the Senate Finance Committee on November 16, 2017 (collectively referred to as the “Senate Proposal”). As of the date of this alert, the Senate Finance Committee has not released a proposed tax bill.
If enacted as they currently stand, both the House Bill and the Senate Proposal would make certain minor changes to retirement plan benefits and would eliminate the favorable tax treatment of many treasured fringe benefits. Employer-sponsored health and welfare plan benefits would be left largely untouched. The House Bill and Senate Proposal are expected to evolve as they progress through the legislative process.
The table below summarizes the key retirement plan, health and welfare plan, fringe benefit, and employment tax provisions of the House Bill and the Senate Proposal.
Click here to view the full table (pdf).
Although the nature of these changes is unsettled, employers should begin to prepare for impending change by taking the following steps:
For a summary of changes contemplated by the House Bill and the Senate Proposal that relate to executive and equity compensation, see our alert “Tax Reform: The Shifting Landscape of Executive and Equity Compensation.”