Be prepared: The Boy Scouts of America will likely be among the beneficiaries of the most substantial legislative change to retirement savings in years.
The organization is one of several charities that offer employees defined benefit pension plans, which require an employer to pay into a pension fund available to the employee upon retirement. Employers purchase insurance from the Pension Benefit Guaranty Corporation, a federal agency that backstops employer pensions, in case they run out of money and can no longer pay the retirement income they guaranteed to employees.
A 2006 law changed the amount employers that underfund their pension plans have to pay in premiums to the agency.
Charities such as the Boy Scouts, as well as farming cooperatives, would no longer have to pay as much in premiums to the agency if a bill that recently passed the House of Representatives becomes law.
The Joint Committee on Taxation estimates the pension premium relief provision to be among the most costly changes in the bill, Setting Every Community Up for Retirement Enhancement Act, known as the Secure Act. If passed in its current form, the pension provision that benefits the Boy Scouts would result in an estimated $1.43 billion decline in revenue for the federal government, although other sections of the bipartisan bill offset the cost.
The Secure Act passed the House with an overwhelmingly bipartisan vote of 417-3 two days before Memorial Day weekend. The three votes against were from Republicans.
“This goes right to the heart of American economic security; it has broad Republican support as well as Democratic support,” said House Ways and Means Committee Chairman Richard Neal, D-Mass., the author of the bill. “And it’s going to the Senate right away, and [Sen.] Chuck Grassley [R-Iowa] has indicated to me that he’s very supportive of the legislation.”
Grassley is chairman of the Senate Finance Committee and is an influential voice on the policies, as is Sen. Rob Portman, R-Ohio, a member of the Finance Committee who drafted legislation similar to Neal’s in the Senate.
In a May 23 statement marking the Secure Act’s passage through the House, Portman urged the Senate to pass the bill quickly.
But the House version of the bill, which also includes a fix aimed at undoing an inadvertent tax increase on families of soldiers killed in action, faces some resistance from Senate conservatives. That resistance prevented the measure from being sent to the president’s desk in time for Memorial Day, a goal much of Congress shared due to the symbolism of the timing.
Sen. Ted Cruz, R-Texas, reportedly blocked the speedy passage of the bill because he wants to include language that would enable parents to use tax-privileged 529 college savings plans to pay for special schooling, tutoring, or care for children with disabilities.
“What I’m saying is we should pass the 529 reform that would help children with disabilities be able to pay for therapy and treatment out of 529s, that would help the 90% of children in public schools pay for tutoring, pay for test preparation,” Cruz told reporters. When asked if he would support the House-passed version that did not contain the 529 reform he wanted, Cruz took a sip from his Diet Coke while the doors of the elevator he stood in closed.
Though Cruz can block the fast-lane passage of the bill through the procedure known as unanimous consent, which can only be applied if no senator objects, the legislation appears to have enough votes to pass when the Senate comes back into session the first week of June.
