Roth Wins Unanimous Victory for Retirement Security & Savings Act of 2000
WASHINGTON -- The Senate Finance Committee unanimously (including proxy votes) approved the modified Chairman's mark of the Retirement Security and Savings Act of 2000, legislation that would expand retirement savings opportunities for millions of Americans.
"The unanimous Finance Committee vote to approve the Retirement Security & Savings Act of 2000 today sends a clear message that millions of Americans deserve to have increased savings opportunities," stated Senate Finance Committee Chairman William V. Roth, Jr. (R-DE). "I hope the White House hears the Senate's strong bipartisan call for increased retirement security for American workers and their families.
"With this vote we are one step closer to helping millions of Americans prepare for a secure retirement by allowing them to save more in their IRAs, their 401(k)s, 403(b)s, 457 and SIMPLE plans. This legislation will help small employers and make it easier to transfer funds between plans to better meet employee needs. And it has special provisions for a non-refundable matching tax credit for low and moderate income savers."
The following is a list of highlights of the Retirement Security & Savings Act of 2000 agreed to today by the Finance Committee:
• Increase the amount individuals can save in an IRA from $2,000 annually to$5,000 annually;
• Allow savers over age 50 to contribute $7,500 annually to an IRA. This would allow people who temporarily leave the workforce (for example, women who opt to stay at home with their children for a few years) to catch up on their retirement savings when they re-enter the workforce;
• Increase the 401(k), 403(b), and 457 plan contribution limits to $15,000 annually (from current law $10,500);
• Increase the SIMPLE plan contribution limits to $10,000 annually (from current law $6,000);
• Creates a "Roth" 401(k) which would allow workers to contribute after tax dollars to their 401(k) plan and withdraw the funds upon retirement tax free (as with a Roth IRA);
• Creates a tax credit for small employer plan contributions and start-up costs which will help offset the first three years of costs that small businesses incur when starting a new retirement plan for their employees;
• Provides a nonrefundable tax credit for low and middle income savers for contributions made to a qualified plan or IRA;
• Allows workers over the age of 50 to make "catch up" contributions to their401(k), 403(b), and 457 plans;
• Requires faster vesting on employer matching contributions from 5 years of employment to be fully vested to 3 years and from 7 year graded vesting to 6 year graded vesting;
• Requires participant disclosure (enforced by tax penalties) when a company converts its pension plan to a cash balance or similar hybrid plan and eliminate the potential for a participant's normal retirement benefit to be "worn-away" by the conversion;
• Makes it easier to transfer funds between retirement plans.
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