H.R. 6757 reforms retirement accounts and family-friendly saving accounts to increase flexibility and encourage savings, and creates a new universal savings account. Selected major provisions of the bill are below.

Title I – Expanding and Preserving Retirement Savings Accounts

The Title exempts individuals less than $50,000 across all eligible retirement plans (other than defined benefit plans) from required minimum distribution rules. The title also repeals the maximum age for contributions to a traditional IRA, which is currently set at age 70 1/2.

The Title permits the portability of lifetime income investments if it is no longer authorized to be held as an investment option. Under the proposal, if an employer terminates a section 403(b) plan under which amounts are contributed to custodial accounts, and the person holding the assets of the accounts is an IRS approved nonbank trustee, then, as of the date of the termination, the custodial accounts are deemed to be IRAs.

Title I clarifies that a retirement income account may cover a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry, regardless of the source of his or her compensation; an employee of an organization, whether a civil law corporation or otherwise, that is exempt from tax under section 501 and is controlled by or associated with a church or a convention or association of churches; and an employee who is included in a church plan under certain circumstances after separation from the service of a church, a convention or association of churches, or an organization described above.

Title III – Other Savings Provisions

Title III permits an individual to establish a universal savings account. An individual may contribute up to $2,500 each taxable year and withdraw the funds tax-free and without penalty at any time and for any use.

The Title also builds on the expansion of 529 Education Savings Plans accomplished in the Tax Cuts and Jobs Act by making four modifications. First the proposal allows distributions to be used for higher education expenses to apply to expenses for books, supplies, equipment, and fees for participation in an apprenticeship program. Second, the proposal allows distributions to be used for expenses associated with homeschooling. Third, the proposal allows expenses for fees, academic tutoring, special needs services, books, supplies, and other equipment as additional qualifying expenses for elementary and secondary school. Additionally, the bill allows some distributions to be used to make payments of principal or interest on a qualified education loan.

Finally, Title III permits penalty-free withdrawals from retirement plans for individuals in the case of a birth or adoption of a child. This includes qualified retirement plans, section 403(b) plans, governmental section 457(b) plans, and IRAs. The bill also allows individuals to recontribute those funds into a retirement plan.

Source: Republican Policy Committee