Yesterday, House Ways and Means Committee Chairman Kevin Brady introduced H.R. 1, the Tax Cuts and Jobs Act. I have to admit, it took me a little while to get through the 429-page bill—and, boy, are these some items to report! Here are the five most important HR provisions you need to know about in the legislation:
- Through the work of SHRM and the SHRM-led Coalition to Protect Retirement, the bill did not contain provisions that would have capped or lowered the amount that employees can contribute to employer-provided defined contribution (DC) retirement plans.
- The bill contained two policy provisions that SHRM has advocated on for several years—improving the guidance related to nondiscrimination testing for defined benefit pension plans and allowing employees additional time to pay back DC retirement plan loans should they be separated from employment unexpectedly.
- Eliminated are several important employer-provided benefits, including employer-provided education assistance (Section 127); the tax exemption for educational assistance for employees, their spouse or dependents at educational institutions (Section 117); dependent care flexible spending accounts; and the tax exemption for adoption assistance, moving expenses, child care, and employee achievement awards.
- Executive compensation is also altered, with modifications to how the taxation is calculated for highly compensated employees who are compensated via a nonqualified deferred compensation plan, as well as the inclusion of stock options as compensation for highly compensated employees and a 20 percent excise tax placed on nonprofits (including 501(c)(3), 501(c)(6)) on the compensation of the five highest paid employees who earn more than $1 million.
- Another provision not included in the bill was a repeal of the Affordable Care Act individual and employer mandate penalties. Discussions are still ongoing, and this provision could be added at a later date.
SHRM Government Affairs will continue digging though the bill over the weekend (fun times!) and will keep evaluating implications of the legislation. The House Ways and Means Committee will hold a multi-day markup beginning on Monday, November 6, 2017, and we’ll have a front-row seat for the action.
The tax bill has a long way to go to cross the finish line, and SHRM, along with the SHRM-led Coalition to Preserve Employer Provided Education Assistance, is actively engaging members of Congress in an effort to advocate for the inclusion of employer-provided education assistance and other issues in the tax bill. Stay tuned to @SHRMKathleen for all tax and benefits updates!