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With the President placing great emphasis on Social Security, overall issues of retirement security have been raised as well.  As the Baby Boomers retire and the workforce paying into Social Security decreases, the other pillars of retirement security become more important. Americans on average, save less than 1% of their after-tax income today compared with 7% at the beginning of the 1990s.  

The Saver’s Credit, created by the Economic Growth and Tax Relief Reconciliation Act of 2001, provides up to a dollar-for-dollar match on contributions to IRA, 401(k), and other retirement plans. Taxpayers can receive tax credits matching up to $1,000 in savings every year (giving them up to $2,000 in savings) if their incomes are below $50,000 for joint filers.

Unlike most tax breaks enacted since 2001, this one truly benefits lower- and middle-income workers.

On October 6, 2004, I introduced the Better Future for American Families Act. I reintroduced the bill in the 109th Congress on April 6, 2005.  HR 1519 would:

• Make the Saver’s Credit permanent. The Saver’s Credit is now expected to expire after 2006.  Unlike nearly all other tax breaks, the budget fails to extend it.

• Expand benefits for middle-class families. The Saver’s Credit phases out rapidly as income rises, providing too small a benefit to families earning more than $30,000 and creating high marginal tax rates for millions of savers who use the credit. This legislation would expand benefits for families earning between $30,000 and $50,000.

• Help more families. There are 57 million taxpayers who are eligible for the maximum credit on paper, but only about one-fifth could actually benefit from the credit if they contributed to an IRA or 401(k). The others lack income tax liability and get nothing. This bill will make these families eligible for the Saver’s Credit by making it a refundable tax credit.

These concepts have been included in the Democratic Plan for Retirement Security

Legislative Information

• Text of HR 1519
• Current cosponsors of HR 1519
• Current status of HR 1519
• Introductory statement from Congressional Record

Op-ed

4/17/05 - Why Risk Key Component of Retirement Security? (Hartford Courant)

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