Comment on the President's Pension Improvement Plan
Sen. Chuck Grassley, ranking member of the Committee on Finance, has been draftinglegislation to tighten up protections for retirement plan participants in light of the Enron Corp.’scollapse. He hopes to introduce his legislation as early as next week. The Committee on Financehas jurisdiction over retirement savings plans because they receive favored treatment under the federaltax code. Grassley made the following comment on the President’s proposal to tighten the rulesregarding retirement savings plans.
“The Enron Corp.’s collapse put pension security on the map. I’m glad to see the Presidentrespond. The tax code smiles on retirement plans, for good reason. Tax breaks encourage employersto set up retirement plans and employees to take part in those plans. If employers find it easy to breakthe rules, then Congress has to re-write the rule book. Otherwise, employees counting on a secureretirement might be left out in cold.
“The President’s proposal is close to the specifications I’ve outlined for my own legislationto stop retirement plan abuse. The Bush proposal for greater freedom to diversify funds, to regulatethe ‘black-out’ periods, and to clarify fiduciary standards during black-out periods are proposals I’vediscussed in the past. In the last two Congresses, I’ve introduced legislation to guarantee participantsget regular benefit statements, and the President included that requirement in his proposal.
“Anti-abuse legislation will build on major improvements to retirement plan laws included inthe tax bill Congress passed and the President signed into law last spring. The tax bill includedextensive changes to rules covering individual retirement arrangements (IRAs) and qualified pensionplans, such as increased contribution limits and catch-up provisions for pensions and IRAs; increasedcontribution and benefit limits for qualified pension plans; and provisions to enhance fairness forwomen. All of these provisions are in effect for this tax year. For example, taxpayers are now ableto contribute an additional $1,000 to an IRA.
“Finally, the President is right on the mark in saying executives should be held to the samerestrictions as lower level American workers during black-out periods. I’ll continue working closelywith the President and the Treasury Department on this important legislation.”
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