The Senate version was unveiled yesterday by Senate Finance Committee Chairman William Roth.
The bill contains many of the provisions from the House Bill, including an increase of 401(k) contribution limits from $10,500 to $15,000, and an increase in the IRA contribution limit to $5,000 from the current $2,000.
The Senate version contains several key differences, which may make it more palatable to Democrats, including:
- Creation of a new 401(k) option that would work like a Roth IRA, allowing workers to contribute after-tax dollars that could later be withdrawn tax-free
- A “catch-up” provision for people over 50 to contribute up to $7,500 a year to an IRA (the House version allowed a one-time $5,000 contribution in 2001)
- Create a tax credit to offset the first three years of costs for small businesses that start new retirement plans for their employees
- Reduce from five years to three years the time it would take an employee to be fully vested in an employer’s retirement program
- Require a company to provide workers with a written notice, including examples and explanation of rights, when a pension plan is converted to a “cash balance” or other hybrid program that could reduce their long-term benefits
- Ban wearaway provisions in future cash balance conversions
“Despite a roaring economy, many Americans still are not saving enough money for retirement,” said Roth, (R., Del.) “We need to make it easier and more appealing for Americans to save for retirement, both through their employers and through their own individual retirement accounts.”
The White House had a “cool” reaction to the Senate provisions, saying it was “strongly opposed” to the measure. No word yet on a possible reaction to the Senate version.
– Nevin Adams email@example.com
The Senate proposal is online at http://www.senate.gov/~finance/9-5-2mar.htm .
The House bill is at: http://thomas.loc.gov/cgi-bin/query/z?c106:H.R.1102.IH .