Thought I would give a quick update on the Retirement Enhancement and Savings Act, which would eliminate the Stretch IRA option for non-spousal beneficiaries. References here to Repub/Dem are strictly for context and not intended as partisan statements.

RESA 2018 expired with the last Congress. Sen. Wyden, ranking member of the Senate Finance Committee has said he plans to file it again. An identical bill was filed in the House for RESA 2018, and I expect that probably will also happen.

During the Repub effort to put together a “Tax Reform 2.0” package in the House towards the end of 2018, various provisions of RESA were cut and pasted into a bunch of other bills, but none of them contained the provision that would kill the Stretch IRA. Whether this was accidental or on purpose is impossible to say. The House side of this is controlled by the Ways and Means Commmittee, which will now be chaired by Richie Neal, D-Mass.

The provision of RESA that kills the Stretch is a “payfor” for the expansion of Multi-Employer Plans (MEPS). Ie. expanding MEPS reduces tax revenue that must be made up for elsewhere (by killing the stretch). They were directly linked. The Tax Reform 2.0 proposals simply ignored the payfor – they expanded MEPS without killing the Stretch.

I think the chances of passing a Stretch-killing RESA have increased slightly with a Dem House. I keep Google News and Congress.gov alerts running on the topic. Most articles are from advisor-side publications and they are almost invariably optimistic on passage, but this has been going on for about 8 years now and it hasn’t happened yet.

My biggest fear is that the Stretch-killing provision gets cut and pasted into some other unrelated bill that passes and is enacted and I read about it the next day. Not that weighing in matters – I wrote snail mail letters to each (26) member of the Senate Finance Committee, my two Senators, and my Congressman and only received one reply, from the Congressman.

I’ll post again if it ever passes, or in 2021 if it expires again, lol.