May 02,2001

Grassley Comment on the House Pension Vote

Today the House is expected to pass legislation to expand contribution limits for IRAs and401(k) plans and encourage more companies to offer retirement pensions. Sen. Chuck Grassley,chairman of the Committee on Finance, and Sen. Max Baucus, lead Committee Democrat, are thesponsors of similar legislation in the Senate. The Grassley-Baucus Retirement Security and SavingsAct of 2001 (S. 742) has a few slight differences from the House bill. Key differences are:

-a special tax incentive for low- and middle-income individuals to save money for retirement(the bill creates a non-refundable income tax credit for contributions made by eligibletaxpayers to a qualified retirement plan);
-tax credits for small business start-up expenses;
-tax credits for small businesses’ matching contributions for their employees;
-slightly different limits in a provision to increase maximum contributions to definedcontribution plans;
-somewhat different provisions for modifying the “top-heavy” rules, which place specialrequirements on small business retirement plans;
-and “catch-up” contributions for individuals age 50 and older that would be broadly availableand not subjected to non-discrimination tests.

Grassley, a long-time sponsor of retirement savings legislation, made the following commenton the expected House action.

“The House is right to move this bill. We’re not getting any younger as anation, and we’re not saving nearly enough for retirement. It’s important forCongress to encourage workers to start saving now. The more appealing we makeit to save for retirement, the more people will do it. It just makes common sense.“I’m looking for the best vehicle to move this legislation in the Senate. Ihaven’t determined whether this bill could be part of the broad tax relief package theFinance Committee is putting together right now or whether the retirement savingsbill could become part of a small-business tax relief measure that we might puttogether later this year. On the broad tax relief package, I’m still talking withCommittee members about their priorities and still waiting for the budget conferencereport to be finalized. When those pieces fall into place, I’ll know much more aboutthe best option for considering the retirement savings bill.”