The House wrapped their final legislative sessions before the midterms by voting on a slew of tax- and retirement-focused bills. Included in the mix was a longstanding priority for members of the National Guard and Reserve.
The Family Savings Act of 2018 creates a new tax-deferred savings account and removes the age restriction (currently 70 ½ years old) on contributing to 401(k) plans. It also includes a slightly modified version of The Servicemember Retirement Improvement Act, a bill aimed at giving National Guard and Reserve members equal military retirement savings options as the active components. It is the biggest step forward on this issue since the creation of the blended retirement system (BRS).
The Servicemember Retirement Improvement Act, originally introduced by retiring Rep. Sam Johnson (R - Texas), amends the Internal Revenue Service Code, allowing members of the Ready Reserve to make the maximum allowable contribution to their Thrift Savings Plans (TSPs), without limiting the amount these members may contribute to a retirement plan based upon other employment. The bill also doubles the maximum allowable contribution amount to the TSPs of federal employees in the Ready Reserve who are not eligible to contribute to any plan other than the TSP.
This is great news for reservists, but can this become law? As is often the case, the legislation failed to gain much traction as a standalone bill, so advocacy groups have been working with policymakers to attach it to a number of larger projects. It came close to being part of the Tax Cuts and Jobs Act of 2017 and the Fiscal Year 2019 National Defense Authorization Act, but inevitably was stripped from each.
The $99 million, 10-year cost estimate is not insignificant, but is certainly a small price to pay to protect against recruitment and retention issues in specialized and necessary fields like doctors and lawyers.
The TSP contribution retirement system was designed to benefit all servicemembers. The men and women of the Ready Reserve are feeling the strains of serving in an operational capacity for nearly seventeen years of sustained conflict and they deserve the same retirement preparation options afforded to other servicemembers.
The Senate, where Sen. John Cornyn (R - Texas) is the leading supporter of this issue, must pass its version of the Family Savings Act then settle differences with the House before the end of the year. Otherwise, we'll be starting from scratch again in the 116th Congress.