WASHINGTON - In the first few days of the 105th Congress, individual retirement accounts and retirement security packages got lots of attention from both Democrats and Republicans.
In laying out their agendas on the first day of business in the Senate, Democratic Minority Leader Tom Daschle and Republican Majority Leader Trent Lott both included retirement savings bills.
Mr. Daschle's bill, S.14, the Retirement Security Act, is a warmed-over version of legislation introduced in the last Congress. It aims to make retirement plans available to more Americans, strengthen protections for workers' money invested in employer-sponsored retirement plans, make it easier for job-hoppers to take their retirement savings with them, and reduce the gap in pension coverage between men and women. It also would let Americans put more money into IRAs and, for the first time, permit farmers a one-time rollover of up to $400,000 in gains from the sale of a farm into a pension plan or IRA. A new wrinkle in the bill is that it would encourage workers to retain ownership in the company for which they work through performance-based stock options that could be exercised without incurring immediate taxes on the difference between the option price and the trading price.
Mr. Lott's package includes a major retirement savings bill introduced by Sen. William Roth, R-Del. Under his bill, S.2, The Family Tax Relief Act, workers would be able to tap their IRAs for college tuition, extended unemployment or starting a new business, without paying the 10% penalty imposed on withdrawals. Americans would be able to claim a 50% tax deduction for profits from sales of stock, bonds and other assets held for more than three years.
Later in the week, Sens. Roth and John Breaux, D-La., introduced an IRA package expanding on Mr. Roth's earlier tax proposal.
The Roth/Breaux bill, S. 197, the Savings and Investment Act of 1997, would allow all workers to participate in a fully deductible IRA by 2001. Current law only allows taxpayers not covered by a pension plan and whose income isn't more than $40,000 for couples or $25,000 for individuals.
Also, homemakers and other workers without employer pensions could contribute up to $2,000 regardless of whether their spouses are covered by a pension.
Taxpayers could opt for the "IRA Plus Account." Contributions would not be tax deductible, but earnings could be withdrawn tax-free under certain conditions.
The bill contains three additional provisions: the $2,000 maximum contribution would be indexed for inflation; people could withdraw funds tax-free for first-time home purchases; IRA and 401(k) plan contributions would not have to be coordinated.
Meanwhile, Sen. Barbara Boxer, D-Calif., introduced three bills aimed to uphold retirement security.
Several bills covering IRAs, congressional and presidential benefits and Social Security were introduced on the first few days of the House session.
Rep. Earl Pomeroy, D-N.D., introduced a bill, H.R. 17, which would create incentives for low-income workers and workers not covered by employer plans to contribute to IRAs. The bill also would double the income ceilings for individuals and couples, so they can contribute more to an IRA and receive earnings tax free.
Mr. Pomeroy also is working on a bill that would make defined benefit plans simple and less costly to administer.
That bill, which he plans to introduce by April, should deal with administrative complexities, including non-discrimination requirements for defined benefit plans. Mr. Pomeroy told Pensions & Investments last year that he considered encouraging defined benefit plan growth a legislative priority.
Separately, Mr. Pomeroy expects to reintroduce a bill next month that would establish a federal commission on retirement savings. He and Rep. Nancy Johnson, R-Conn., first introduced that measure last year.