House Passes Pension Reform Bill

Part 1: Increases IRA & 401(k) contribution limits

More of this Feature • 2: Detailed CRS Summary of Bill    Join the Discussion "If you think any politician is afraid of the voters you are living in a vacuum" JERRYP255 Click to Read/Reply     Related Resources • Congressional News • Small Business Retirement Help • Find Missing Pension Money    From Other Guides • Pension Reform Progress • Are You Planning for Retirement?    Elsewhere on the Web • House of Representatives • Employee Benefits Research Institute • Pension Benefit Guarantee Corp.

Dateline: 05/02/01

The U.S. House of Representatives today passed by a 407-24 vote, a bill designed to increase the number of American workers covered by retirement plans and raising limits on contributions to IRAs and 401(k) plans.

The bill -- H.R. 10 - Comprehensive Retirement Security and Pension Reform Act of 2001 -- is sponsored by Rep. Bob Portman (R-OH) and Rep. Ben Cardin (D-MD).

An almost identical bill easily passed the House last year but was never considered by the Senate. This year, however, its supporters believe the bill has a chance to win passage in the Senate and the signature of President Bush.

Highlights of the bill include:

• Increase the limit on tax-deferred contributions to individual retirement accounts (IRAs) from $2,000 to $5,000 per year by 2004.
  
  
• Increase the limit on tax-deferred contributions to 401(k) plans from $10,500 to $15,000 per year by 2006.
  
  
• Offers "catch-up" provisions allowing persons age 50 and over to increase contributions even more quickly.
  
  
• Offers over 50 provisions supporters hope will encourage more employers, especially small businesses, to offer employee pension plans. These provisions include shorter employee vesting times, greater portability of retirement plans for employees changing jobs, and simplification of the Tax Code as applied to pension plans.

The Congressional Research Service estimates the cost of the bill, if enacted, at around $52 billion over ten years.

According to the Employee Benefits Research Institute, some 70 million workers are not currently covered by a pension plan and over one-half of all 401(k) accounts amount to less than $10,000 in savings.

In the Senate, the bill could be incorporated into either the overall tax-cut package requested by President Bush or into a bill cutting taxes for small businesses to be considered later this year.

The detailed report on this bill as prepared by the Congressional Research Service (CRS) is shown on the next page.

Next page > CRS Summary of This Bill > Page 1, 2

 

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