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Pensions: Major Provisions of the Retirement Security and Savings Act of 2000, Date: January 12, 2001 1 (January 12, 2001)

handle is hein.tera/crstax0290 and id is 1 raw text is: Order Code RS20675 Updated January 12, 2001 Pensions: Major Provisions of the Retirement Security and Savings Act of 2000 Paul J. Graney Analyst in Social Legislation Domestic Social Policy Division Summary Oni September 13. 2000. the Senate Finance Committee reported ii.R. I102 (S.Reit. 106-411) as a tax reconciliation bill kno aIS the Retiement Securitn anld Savins Act of 2000. This bill contained many provisions siilar to the Comprehensine Retirement Secur1ity and Pension Reform.Act of 2000. H.R. 1 102 as paissed by the H-ouse of R he resentatives on Juy 19, 2000. The main additions in the Senate bill were provisions that would l e iprolded () a nonrefundable tax credit to lo- and middle- income taxpay ers 18 and ov er w\ho contribute to a qualified retirement ptlan or individual retlir~eent aIccoun1t (I RA). and (2) a tax credlit to sma,11 ll ploy ers to dlefray Some of the stat-nIA costs of establishing a emloee piensio or retirement saveings lan. The ient Committee on Taxation estimated that tle proposals in the Chairman's Mlark and its modifications would esult nu a eVelite loss of $26.7 billion over 5 years and $42_3 billion ove- 10 N ars. A Separate report describes the Houlse-passed version of H.R. 1 102.1 Althoug~h the Senate applroved a motion to consider the conference report onl H.R. 2614 w\hich ice tensiono Provisions of H.R. 102, the measure was not assed before the I06t Congress ajc ournedl in December 2000. This report ill not be updicatedl. Individual retirement accounts. The $2,000 annual contribution limit for individual retirement accounts (IRAs) is not indexed to the rate of inflation. Had the original 1975 limit of $1,500 been adjusted yearly to account for increases in the Consumer Price Index, it would have reached $5,353 in 2000. If the $2,000 limit set by Congress in 1981 had been adjusted annually, it would have reached $4,158 in 2000. Proponents of raising the limit on IRA contributions argue that it will encourage people to save more for retirement. Opponents say that it will result in little new saving because a substantial part of additional IRA contributions will consist of funds that would have been saved anyway. The bill would have increased the annual limit on IRA contributions to $3,000 in 2001, $4,000 in 2002, and $5,000 in 2003. In years after 2003, the limit would have been indexed to 1 CRS Report RS20629, Pensions: Major Provisions of the Comprehensive Retirement Security and Pension Reform Act, by Patrick Purcell. Congressional Research Service ° The Library of Congress CRS Report for Congress Received through the CRS Web

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