Advancing Policy Priorities Act
Sponsored By: Representative Magaziner
Introduced
Summary
This bill would modernize and expand retirement savings rules and employer incentives. It would also expand veteran apprenticeship access and create protections for federal employees injured on duty.
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- Workers and savers would see major plan changes: required automatic enrollment with defaults that start at 3–10% and rise to at least 10%, phased increases in required minimum distribution ages to 73–75, a $10,000 catch-up for ages 62–64, and the Saver’s credit set at 50% with new income thresholds.
- Small employers would get bigger incentives and easier plan access: the startup plan credit would be boosted to 100% for eligible employers, a new credit for employer contributions would be capped at $1,000 per employee, and employers could match qualified student loan payments with a clear safe harbor for small incentives.
- Veterans, separating service members, and injured federal employees would get more support: Transition Assistance materials and a public apprenticeship website would list registered programs and veteran cost info, a Boots to Business entrepreneurship program with grant authority would operate through Sept. 30, 2028, and injured federal workers would gain rules to protect creditable service and reappointment opportunities.
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Bill Overview
Analyzed Economic Effects
25 provisions identified: 18 benefits, 1 costs, 6 mixed.
Retirement credit for injured federal employees
If enacted, certain covered federal employees who suffer an on-duty illness or injury and move to a non-covered position could have their prior service treated as creditable covered service for retirement unless they opt out. The agency head must certify the injury, the move must have no break exceeding three days, and the rule applies to injuries occurring two years after enactment.
Bigger catch-ups and lower RMD penalties
If enacted, several rules would make retirement saving and distributions easier for individuals. People who turn 62 but not 65 before year-end would be able to make larger catch-up contributions: $10,000 for non‑SIMPLE plans and $5,000 for SIMPLE plans, indexed annually; this applies to tax years after Dec. 31, 2025. The excise tax for missed required minimum distributions would fall from 50% to 25% and could be 10% if corrected during a defined correction window; this applies to tax years after Dec. 31, 2024. The mandatory cash-out threshold for small balances would increase to $7,000 for distributions after Dec. 31, 2024. Qualifying first responders could exclude some disability pension payments from income for tax years after Dec. 31, 2029.
Limit IRA penalty to involved amount
If enacted, when a prohibited transaction involves an IRA the tax rules would treat only the 'amount involved' as distributed rather than treating the entire IRA as terminated. The bill requires fair-market valuation of the portion involved and applies to taxable years after enactment.
One-time IRA gifts to split-interest trusts
If enacted, taxpayers could make a one-time election to treat certain IRA trustee-to-charity transfers to qualifying split-interest entities as Qualified Charitable Distributions, up to a $50,000 aggregate cap (indexed for inflation). The election would apply to distributions in tax years ending after enactment and strict funding and valuation rules apply.
Stronger Saver's Credit for Low-Income
If enacted, the Saver's Credit rate would be set at 50%. The credit would phase down as your adjusted gross income rises above a threshold ($48,000 for joint filers; scaled for other filing statuses) using a defined phaseout amount ($35,000 for joint filers; scaled). These thresholds would be inflation‑adjusted after 2028.
Bigger startup retirement-plan credit
If enacted, small employers could get a larger startup tax credit for creating a retirement plan. The bill raises the basic credit for very small employers and adds an extra per-employee credit equal to a phased percentage of employer contributions, capped at $1,000 per employee and phasing 100%/75%/50%/25%/0% by plan year.
New Roth rules for employer plans
If enacted, SIMPLE and SEP plans could offer Roth-designated treatment when an employee elects it, and SEP Roth contributions would be includible in income. The bill also narrows elective-deferral rules so that, for most plans, elective deferrals must be designated Roth contributions, shifting tax timing for many workers.
Higher RMD ages and annuity rules
If enacted, required minimum distribution ages would phase up (applicable ages of 73, 74, or 75 depending on birth year), delaying when you must take taxable withdrawals. The bill would also remove the 25% cap on QLAC premiums, allow a longer 90‑day free-look on certain longevity annuities, and permit limited annual payment increases under 5% for qualified commercial annuities.
Penalty-free withdrawals for victims and firefighters
If enacted, certain early distributions would avoid the 10% penalty. Victims of domestic abuse could take up to the lesser of $10,000 or 50% of their nonforfeitable accrued benefit penalty-free during a one-year victim period, with a three-year repayment window. Employees who provide firefighting services could take specified plan distributions without the 10% penalty for distributions after December 31, 2024.
New retirement rules for small employers
If enacted, small employers would get several new retirement rules and incentives. Employers could elect to adopt some plan amendments that raise prior-year benefit accruals as of the last day of the prior plan year if the amendment is adopted before the employer's tax return due date; this would apply to plan years beginning after Dec. 31, 2025. The bill would limit extra service-time conditions for part-time workers so employees with two consecutive 12-month periods of at least 500 hours and age 21 would qualify sooner; this applies to plan years beginning after Dec. 31, 2024. The bill would also create a military-spouse credit worth $250 per eligible military-spouse employee plus up to $250 of employer contributions for the year the employee starts and the next two years; the credit applies to taxable years after enactment.
More ESOP sales eligible for deferral
If enacted, the ESOP gain-deferral election would be available for qualifying sales by any domestic corporation (not just C corporations). For S corporation sellers, only up to 10% of the sale amount could be deferred. The ESOP rules would also add clear criteria for when employer stock is 'publicly traded' for plan purposes (applying after December 31, 2029).
Allow ETFs inside annuities and contracts
If enacted, the Treasury would be required to update rules within seven years so insurers can use exchange‑traded funds in variable annuity, endowment, and life insurance segregated accounts. The change would also revise diversification rules and define authorized participants and market makers. These provisions would apply to segregated account investments made seven years after enactment.
Automatic enrollment for 401(k) and 403(b)
If enacted, most 401(k) and 403(b) plans would automatically enroll workers at a default of 3%–10% of pay in year one and increase deferrals by 1 percentage point each year until at least 10% (ceiling 15%, with a 10% ceiling for early plan years). The bill would give small plans safe harbors for reasonable automatic-enrollment errors and allow modest de minimis incentives to encourage employee elections. It would also authorize pooled plans and 403(b) multiple-employer plans, require a non-employer named fiduciary for pooled plans, and provide interim relief while plans adopt these changes.
Plan recovery and paper statement rules
If enacted, plans could recover inadvertent overpayments but may not charge interest and generally could recoup no more than 10% of the overpayment per year and not reduce periodic payments below 90% of the prior amount. The bill would also let administrators rely on participant hardship certifications and require at least one paper pension statement per year (one every three years for defined benefit plans) unless you elect electronic delivery.
SelectUSA semiconductor investment review
If enacted, SelectUSA would solicit State economic development input within 180 days on ways to attract semiconductor foreign investment and protect against foreign-adversary risks. SelectUSA must report to Congress within two years with recommended strategies and actions.
Find lost accounts and clearer benchmarks
If enacted, the Labor Department and Treasury would set up a searchable 'Retirement Savings Lost and Found' within two years to help people find missing plan accounts. Plan administrators of covered plans would have to submit specified plan and participant data and the Labor Department would be required to protect privacy. The Labor Department would also issue rules allowing blended benchmarks for mixed-asset investment options within one year and report to Congress within three years.
Timing changes for government 457(b) plans
If enacted, the timing rules for deferral elections in governmental 457(b) plans would be relaxed. For eligible government employers, a deferral agreement would only need to be entered into before the compensation is currently available, rather than on the first day of the month.
Veteran apprenticeship and business training
If enacted, the Labor Department would set up a public website listing apprenticeship programs for veterans and update apprenticeship.gov with searchable program details. The bill would also fund a Boots to Business entrepreneurship training program for veterans through September 30, 2028, subject to available appropriations.
Higher penalties for crimes near schools
If enacted, the bill would add up to five years in prison when sex trafficking under federal law happens in a school zone or within 1,000 feet of school activities or college property. It would also add up to five years when someone knowingly entices or coerces a minor who is enrolled in school and present in those school-related locations. The changes expand locations that trigger enhanced penalties.
Protect congressional whistleblower identities
If enacted, the House would bar Members, officers, and staff from knowingly and willfully publicly revealing the identity or personal details of people who report possible wrongdoing to Congress under whistleblower laws. Exceptions would include the reporter's written consent, if the person already went public, or a two‑thirds committee vote with notice and a written explanation.
Telehealth grant for nursing facilities
If enacted, $1,000,000 would be appropriated to a Telehealth Resource Center to help nursing facilities and skilled nursing facilities adopt telehealth. The funds would be for the fiscal year ending Sept. 30, 2026 and remain available through that date.
One-year extension for livestock reporting
If enacted, the bill would push the expiration date for livestock mandatory reporting from 2024 to 2025. The change would take effect when the bill becomes law.
Shorter repayment window for birth/adoption
If enacted, the repayment period for a qualified birth or adoption distribution would be limited to three years after the distribution. This change shortens the earlier repayment flexibility and is applied as if included in the SECURE Act of 2019.
DHS review for nonstandard grant equipment
If enacted, the Department of Homeland Security would have to use a single review process for grant requests to buy equipment that does not meet voluntary national standards or is not on the Authorized Equipment List. DHS would consider factors like past federal use, international standards, capability gaps, and comparative benefit. The DHS Inspector General must report on the process within three years, including how many requests were granted or denied.
Small $1M appropriations to five agencies
If enacted, the bill would appropriate $1,000,000 each to several federal offices for FY2026: USDA Office of Budget and Program Analysis, Army operation and maintenance, the Energy Information Administration, DHS Management Directorate, and the State Department Capital Investment Fund. Some funds would remain available until expended where noted.
Sponsors & CoSponsors
Sponsor
Magaziner
RI • D
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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