Late Thursday night, as the Senate Finance Committee was nearing the end of a marathon session considering amendments to the Tax Cuts and Jobs Act by Democrat lawmakers, Sen. Ben Cardin, D-MD, offered an olive branch to the exhausted Republican chair of the panel.
Cardin had an amendment in hand to rollback a provision in the bill that eliminates extra contributions to 403(b) defined contribution retirement plans.
The version of the TCJA that passed out of the Finance Committee would scrap extra contributions to retirement plans sponsored by non-profits and government agencies.
Under current law, participants in 403(b) plans that have 15 years of service can make an additional $3,000 of deferrals. And employers can continue contributions in plans for up to five years after an employee leaves her job.
In conforming deferral caps across all defined contribution plans—401(k), 403(b), and 457 plans—the TCJA would raise $1.7 billion in revenue over 10 years.
Cardin’s amendment, which was co-sponsored with Sen. Sherrod Brown, D-OH, would scratch that pay-for.
Cardin spoke to the value of protecting the existing extra deferrals, which are designed to allow workers in non-profits and so-called Church Plans to bolster retirement savings in light of the lower earning potential in not-for-profit sectors of the economy.
But he did not insist that Sen. Orin Hatch, R-UT, chair of the Finance Committee, put the amendment to a vote, which was sure to be voted down by the Republican majority.
The gesture appeared as an act of intentional magnanimity. Cardin said he hoped his amendment would be considered as the tax bill moves to the Senate floor.
Sen. Rob Portman, R-OH, whose own amendment was responsible for striking new limits on catch-up contributions to 401(k) plans, voiced his support for the Cardin amendment.
Cardin and Portman have a long history of advancing bi-partisan retirement legislation.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
