WASHINGTON -- The Senate's economic stimulus agreement is expected to allow companies to put off pension contributions and workers to access retirement savings penalty free, while also correcting two of the most embarrassing drafting errors in the 2017 tax code overhaul.
It would also provide a long-sought fix to allow workers to exclude student loan repayment assistance from their employers from their taxable income, similar to the current treatment for employer-provided tuition aid. Senate Minority Leader Charles E. Schumer, D-N.Y., and other Democrats touted that provision in the emerging agreement.
The bill also would relax rules on taking out loans against retirement savings and waive a $13.50 per proof gallon federal excise tax paid by distillers on alcohol that they use to make hand sanitizers, according to a draft of the legislation circulating Wednesday. That would be a pleasant surprise since lobbyists as of Tuesday hadn't expected the language to make it into the final version, and it was left out of prior iterations.
Perhaps the most important retirement feature expected to be in the bill is allowing companies to delay required pension plan contributions until the end of 2020, said Lynn Dudley, senior vice president at the American Benefits Council, which represents the country's largest employers on benefit matters.
"That gives companies flexibility" though they'll have to pay interest, she said. "It puts cash in companies' hands now."
The centerpiece of the tax title remains the inclusion of direct payments to households: up to $1,200 for individuals and $2,400 for joint filers, with an extra $500 per child.
Those amounts phase out by 5 percent of adjusted gross income above $75,000 for single filers and $150,000 for married couples. So a family of four earning $200,000 would see their credit reduced to $900 from the maximum $3,400.
Two drafting errors in the 2017 tax bill would be fixed to help retailers, who were suffering from stiff competition from Amazon.com even before COVID-19 spread, and are now seeing far less foot traffic as a result of people staying home.
One mistake in the 2017 law prevents retailers and restaurants from depreciating building improvements in a single year, as intended in the 2017 bill. Instead, these establishments must depreciate improvements over an embarrassingly long 39 years, which supporters of the fix and economists say has led to businesses delaying improvements.