House and Senate Tax Reform Proposal Comparison
Employer-Provided Retirement Plans
| H.R. 1, Tax Cuts and Jobs Act | Senate Proposal, Tax Cuts and Jobs Act |
| Defined Contribution Retirement Plans | |
Preserves the current tax treatment of employer-provided plans
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| Defined Contribution Retirement Plan Loans | |
Changes repayment time frame on retirement plan loans from 60 days after separation of employment to end of the federal taxable year. Effective for plan years after 2017.
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Changes repayment options for 457 and 403(b) plans to allow rollovers or loan repayment to take place by the end of the federal taxable year. Effective for tax years after 2017.
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| Defined Benefit Pension Plan Non-Discrimination Clarity | |
Provides relief for defined benefit pension plans that are soft-frozen. Allows cross-testing of participants in order to not violate non-discrimination testing limits. Effective upon date of enactment.
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Proposal does not contain this provision.
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| 457 Retirement Plan Changes | |
Bill does not contain this provision.
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Sets deferral and catch-up contribution limits at the same levels as 401(k) and 403(b) plans. Also repeals former allowable contributions to 457 plans for up to five years after separation of employment. Effective for tax years after 2017.
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| In-Service Distributions for Defined Contribution Plans | |
| Would allow all defined benefit plans as well as state and local government defined contribution plans to make in-service distributions beginning at age 59½. Effective for plan years after 2017. | Proposal does not contain this provision. |
| Defined Benefit Retirement Plan Contributions After Hardship Withdrawal | |
| IRS would be required within one year of the date of enactment to change its guidance to allow employees taking hardship distributions to continue making contributions to the plan. Effective for plan years after 2017. | Proposal does not contain this provision. |
| Defined Benefit Retirement Plan Hardship Withdrawals | |
| Employers who choose to allow hardship distributions could also include employer contributions as part of the amount eligible for withdrawal. Effective for plan years after 2017. | Proposal does not contain this provision. |
Executive Compensation
| H.R. 1, Tax Cuts and Jobs Act | Senate Proposal, Tax Cuts and Jobs Act |
| Compensation | |
| Removes the exemption of certain forms of compensation for highly compensated employees. Commissions, performance-based remuneration, stock options, payments to a tax-qualified retirement plan and amounts that are excludable from the executive’s gross income will be taxable. Expands the scope of covered individuals to include an organization’s CEO, CFO and three highest-paid employees. Effective for tax years after 2017. | Modifies the definition of what is included as compensation for highly compensated employees to include commission- and performance-based compensation. Expands the scope of covered individuals to include an organization’s CEO, CFO and three highest-paid employees. Applies provision to any compensation arrangement entered into after November 3, 2017. |
| Excise Tax on Highly Compensated Employees at Non-Profits | |
| Creates a 20 percent excise tax for non-profits (including 501(c)(3), 501(c)(6)) on the compensation of the five highest-paid employees who earn more than $1 million. Effective for tax years after 2017. | |
Employer-Provided Benefits
| H.R. 1, Tax Cuts and Jobs Act | Senate Proposal, Tax Cuts and Jobs Act |
| Education Assistance (Section 127) | |
| Eliminates the tax exclusion that allows employers to provide up to $5,250 of education assistance per year tax-free to their employees at the undergraduate, graduate or certificate level. Benefit would be taxable to both the employer and the employee. Effective for tax years after 2017. | Proposal does not contain this provision. |
| Tuition Reduction (Section 117) | |
| Eliminates the tax exclusion for educational assistance for employees, their spouse or dependents at educational institutions. Benefit would be taxable to both the employer and the employee. Effective for tax years after 2017. | Proposal does not contain this provision. |
| Dependent Care Accounts | |
| Eliminates the tax treatment of dependent care flexible spending accounts of up to $5,000 per year under Section 129. Effective after 2022. | Proposal does not contain this provision. |
| Moving Expenses | |
| Eliminates the tax exclusion and the deduction related to moving expenses. Value of the benefit will be included as taxable income and the deduction will be eliminated for individual taxpayers. Effective for tax years after 2017. | Suspends the tax exclusion and the deduction related to moving expenses until 2025. Value of the benefit will be included as taxable income, and the deduction will be eliminated for individual taxpayers. |
| Biking Benefit | |
| Bill does not contain this provision. | Eliminates the tax exclusion on the benefit. Value of the benefit will be included as taxable income. Exclusion will be sunset in December 2025. |
| Adoption Assistance | |
| Eliminates the tax exclusion on the benefit. Value of the benefit will be included as taxable income for individual taxpayers. Effective for tax years after 2017. | Proposal does not contain this provision. |
| Achievement Awards | |
| Eliminates the tax exclusion on the benefit. Value of the benefit will be included as taxable income for individual taxpayers. Effective for tax years after 2017. | Proposal does not contain this provision. |
| Child Care Facilities | |
| Repeals the tax credit equal to 25 percent of qualified expenses for employee child care and 10 percent of qualified expenses for child care resource and referral services. Effective for tax years after 2017. | Proposal does not contain this provision. |
Fringe Benefits
(Transportation, Meals, Gyms)
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| Taxes tax-exempt entities on the values of providing their employees with transportation fringe benefits, on-premises gyms and other athletic facilities by treating the funds used to pay for such benefits as unrelated business taxable income, thus subjecting the values of those employee benefits to a tax equal to the corporate tax rate. Value of the benefit will be included as taxable income. Effective for tax years after 2017. | Proposal does not contain this provision. |
| Medical Savings Accounts (MSAs) | |
| Repeals the tax exclusion for contributions to Archer MSAs. Existing Archer MSA balances, however, could continue to be rolled over on a tax-free basis to an HSA. Effective for tax years after 2017. | Proposal does not contain this provision. |
Other Related Provisions
| H.R. 1, Tax Cuts and Jobs Act | Senate Proposal, Tax Cuts and Jobs Act |
| Work Opportunity Tax Credit | |
| Repeals the 40 percent tax credit for employers who hired individuals from certain targeted groups. Effective for tax years after 2017. | Proposal does not contain this provision. |
| FICA Tip Credit Tax | |
| Modifies the calculation that affects the amount employers pay on taxable wages of their tipped employees. Creates a new reporting requirement. Effective for tax years after 2017. | Proposal does not contain this provision. |
| Intermediate Sanctions on Non-Profits | |
| Bill does not contain this provision. | Applies intermediate sanctions rules to 501(c)(5) and 501(c)(6) organizations, levying a 10 percent tax on the organization for willful violations. Eliminates the safe harbor for non-profits that exercise due diligence in determining compensation. Effective for tax years after 2017. |
| Repeal of the Individual Mandate Penalty Under the Affordable Care Act | |
| Bill does not contain this provision. | Reduces the individual mandate penalty to zero. Effective for tax years after 2018. |
| Family and Medical Leave Act (FMLA) Credit for Employers | |
| Bill does not contain this provision. | Provides an employer a credit of 12.5 percent of the wages paid to a qualified employee utilizing FMLA. Effective for tax years after 2017. |
*Proposals as of November 25, 2017. Posted from SHRM.
