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![handle is hein.taxfoundation/iretcgadv0105 and id is 1 raw text is: V
July 18, 2000 No. 108
EXPANDING IRAS AND PENSIONS:
H.R. 1102
Most Americans have insufficient savings and
are relying on an overstressed
System for their retirement
needs. The personal saving
rate is at an all time low.
Only about half of the work
force participates in 401(k)-
type or other workplace
related retirement
arrangements. Contribution
limits on such plans and on
IRAs and limits on benefits
payable under defined benefit
plans have not been increased
since the 1980s or have
actually been lowered.
Fortunately, the House of
Representatives has passed
H.R. 1102, a pension
expansion and reform bill. It
would expand annual
contribution limits on IRAs to
$5,000 and increase limits on
other tax deferred pensions. It
would reform pension
regulations to encourage
earlier vesting and easier
portability of pensions betweer
Social Security
improvement in the tax system. H.R. 1102 passed
the House with overwhelming bipartisan support -
a vote of 401 to 25 - on July 18. It now moves
to the Senate, which may take up the issue in
September.
Specifically, H.R. 1102 would increase yearly
allowable contributions to regular and Roth IRAs
from $2,000 in 2000 to $3,000 in 2001, $4,000 in
2002, and $5,000 in 2003. Savers age 50 and
above could contribute $5,000 beginning in 2001.
Limits on deferral of employees' salaries in 401(k)
and 403(b) plans would rise in stages from $10,500
in 2000 to $15,000 in 2005, with workers over 50
allowed an additional $5,000 a year in catch up
contributions to make up for years in which they
were unable to participate. These limits would be
adjusted for
thereafter.
Most Americans have insufficient
savings and are relying on an
overstressed Social Security
Systeimfor ti reotheirr ement needs.
The per-sonal saing ratte is ait an
all time low. Only about half of
the wvork for-ce par-ticipa(tes in
401(k)-type or other workplace
related retirement arrangements...
H.R. 4843.. [which] thefull House
of Representatves is expected to
vote on it this week... would
expind annual contribution limits
on IRAs to $5,000 and incr-ease
limits on other tax deferred
pensions. It would reform
pension regulations to encourage
earlier vesting and easier
portability of pensions between
Jobs.
These
The catch up
inflation
Limits on employer
contributions to defined
contribution plans and limits
on annual benefits in defined
benefit plans would be
increased. Numerous other
restrictions would be eased.
Portability of pensions
between jobs would be
enhanced by allowing
rollovers among IRAs, 401(k),
403(b), government section
457, and qualified employer
plans. Workers would become
vested and eligible for
matching employer
contributions in 3 years
instead of 5. Workers would
receive enhanced benefits in
section 415 multi-employer
plans.
and portability elements of the
reforms are long overdue, and would be a big
Institute for
Research on the
Economics of
Taxation
bill would be of special interest to women who
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