President signs tax extenders, spending bill that makes many tax provisions permanent, including two benefits provisions

President Obama on December 18, 2015 signed a combined tax-extender package, the Protecting Americans from Tax Hikes (PATH) Act of 2015, totaling over $600 billion, and a $1.1-trillion omnibus spending bill. Both bills were merged in the Senate and the bill is referred to as the Consolidated Appropriations Act, 2016 (H.R. 2029). The bill was sent to the President after the Senate passed the PATH Act on December 18, 2015 by a margin of 65 to 33. Earlier in the day, the House passed the omnibus spending legislation separately by a vote of 316 to 113. The House approved the PATH Act on December 17, 2015 by a vote of 318 to 109.

The extenders package revives over 50 tax provisions: some permanently, others for five years, and over 25 other provisions through 2016. The bill also includes over 60 other provisions on a variety of topics, including employee benefit plans. Overall, the PATH Bill makes permanent over 20 tax-extender benefits, split 50-50 between business and individuals.

Among the employee-benefit related extenders that the package makes permanent are: parity for exclusion of employer-provided mass transit and parking benefits; and tax-free distributions of up to $100,000 from IRAs for charitable purposes for individuals who are at least age 70 1/2.

Other miscellaneous tax provisions concerning employee benefits were also added to the extenders package, including rollovers permitted from other retirement plans into SIMPLE IRAs, extension of a special rule for certain benefits paid by accident or health plans of a public retirement system to such benefits paid by plans established by or on behalf of a state or political subdivision, a technical amendment clarifying the effective dates of P.L. 113-243 to allow the rollover of certain airline payment amounts received in certain bankruptcies to an IRA, and the extension of relief under current law, which provides an exception to the 10% penalty on withdrawals from retirement accounts before age 50, to nuclear materials couriers, the United States Capitol Police, the Supreme Court Police, or diplomatic security special agents of the Department of State. Also included are clarifications relating to church plans covering aggregation of plans, maximum benefit accruals, auto-enrollment accounts similar to 401(k) plans, certain reorganizations, and investing in collective trusts.

The appropriations bill includes a delay of the excise tax on high cost employer-sponsored health coverage to 2019, but does not include blocked funding for a Department of Labor “fiduciary responsibility” rule – a rule designed to ensure that financial advisers provide advice in the best interests of their clients.

Source: P.L. 114-113.

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