The provisions permit increasingly higher annual contributions to 401(k) plans until they reach $15,000 in 2006. Contributions to individual retirement accounts (IRAs) would top out at $5,000 in 2008.
Under current law, these provisions would expire at the end of 2010, when, among other things, retirement-plan contributions would drop back to 2001 levels, and those over 50 would cease to benefit from the “catch-up” limits provided for under the Act.
Still, Democrats argue that today’s vote does not go far enough to guard against future Enrons and have offered an alternative that would not only repeal the sunset date for the retirement tax breaks, but would make additional changes, including, among other things:
- preventing companies from deducting more than $1 million in performance-based executive compensation if the increase in performance was achieved through the manipulation of pension fund money
- taxing deferred compensation benefits for executives if they are protected from bankruptcy or other financial problems.
- requiring corporate executives to pay capital-gains taxes on their stock options when their corporation moves overseas.