Dreier Votes to Make Permanent
Increases of 401(k) & IRA Contribution Limits
June 21, 2002
WASHINGTON, D.C. - Pointing the importance of planning when it comes to Americans' retirement, Congressman David Dreier (R-San Dimas), Chairman of the House Rules Committee, voted today to make permanent the increases in contribution limits for 401(k)s and IRA's that were made law last year. The Retirement Savings Security Act of 2002, H.R. 4931, was approved today with bipartisan support, 308-70.
"Last year, we enacted bipartisan reforms to make it easier for Americans to save more for their retirement," Dreier said. "But if we fail to make these reforms permanent, they will expire along with the rest of the tax cut in 2011. For many Americans, this is a critical issue because retirement is approaching so quickly. America's workers need and deserve certainty in the laws as they plan for their retirement. That's what making these reforms permanent is so critical for millions of Americans' futures."
Summary of Portman-Cardin provisions contained in the comprehensive tax relief package that was passed last year:
- Individual Retirement Accounts (IRAs): The current-law $2,000 IRA contribution limit (established in 1981) for both traditional and Roth IRAs increases to $5,000 by 2008 and indexed for inflation thereafter.
- Increased Contributions to 401(k) Plans and Other Pensions: The limit on individual contributions to 401(k)-type plans increases to $15,000 by 2006;
- Catch-up Contributions: Additional "catch-up" contributions for workers age 50 and above permitted for 401(k)-type plans and IRAs.
- Faster Vesting and Pension Portability: The vesting requirements for employer matching contributions is now reduced from 5 to 3 years.
- Regulatory Relief to Encourage Small Business Pension Growth: Pension laws were modernized and streamlined to encourage small businesses to offer pension plans.
