WASHINGTON – The House of Representatives today passed legislation, cosponsored by First District Congressman Paul Ryan, that would increase the amount Americans could put into tax-favored Individual Retirement Accounts (IRAs) each year and that would also improve retirement security through pension reform and modernization. The bill, referred to as The Comprehensive Retirement Security and Pension Reform Act (H.R. 1102), passed with bipartisan support by a vote of 401-25.

Over the next three years, this legislation would raise the annual limit on IRA contributions from the present $2,000 per individual to $5,000. (The limit would be increased to $3,000 in 2001, $4,000 in 2002, and $5,000 in 2003 and thereafter indexed for inflation.) To help older individuals better prepare for retirement, the bill allows taxpayers age 50 and over to contribute up to $5,000 annually to an IRA beginning in 2001.

The bill includes pension law reforms that would raise contribution limits to 401(k)-type plans and improve portability of pension benefits so workers can more easily take their retirement plan assets with them when they change jobs. This legislation also encourages employers to offer pension plans by reducing regulatory burdens on plan sponsors. In addition, it corrects problems in the U.S. tax code, specifically section 415 of the tax code, that unfairly deny some workers covered by multiemployer plans the full retirement benefits they have earned.
 
“This legislation is great news for Wisconsin workers and their families,” said Ryan. “It boosts retirement security by empowering people to put more savings into IRA’s and 401(k)s. The bill also updates our nation’s pension system, encouraging more businesses to offer pensions and helping workers carry  retirement plan savings with them when they change jobs.”

“Wisconsin seniors’ retirement security depends not only on a strong Social Security system, but also on personal savings and employer-sponsored pensions,” added Ryan. “These are important parts of comprehensive retirement planning, yet many workers still miss out on maximizing these benefits. According to the Department of Labor, half of all private sector workers still have no pension coverage. Today’s legislation opens up greater benefits and savings opportunities for all.”

IRAs were established in 1974, to be effective for taxable years beginning in 1975, with an original annual contribution limit of $1,500. This limit was raised in 1981 to its current-law $2,000, which has not been indexed to the rate of inflation. The Congressional Research Service reports that if the original limit of $1,500 had been adjusted yearly to account for increases in the Consumer Price Index, it would have reached $5,353 in 2000.