Saturday, June 17, 2000
Portman reintroduces retirement bill
Plan would raise limits on IRAs
By Amy Higgins
The Cincinnati Enquirer
Rob Portman is determined to see us retire comfortably.
Within the next few weeks, the Republican Congressman from Terrace Park will introduce his sweeping pension reform bill to the U.S. House of Representatives for the third time.
If adopted, the measure would raise IRA contribution limits from $2,000 to $5,000 over the next five years. Caps on employer-sponsored 401(k) plans also could go from $10,500 to $15,000 (not including employer matches).
People aren't saving enough for retirement, Mr. Portman said. We want to encourage and implore people to set more aside so they have peace of mind in their retirement years.
The legislation might prove popular: Only about one-quarter of us are very confident in our ability and savings to retire comfortably, according to an annual survey by the Employee Benefits Research Institute.
The same survey also found that people are generally overly confident, with a smaller nest egg than they need. Industry observers agree that raising the contribution limits on IRAs from $2,000 to $5,000 would help.
There has been no increase since 1981, said John Collins, spokesman for the Investment Company Institute, a mutual fund trade group that tracks some retirement account investments.
That's a major concern behind the legislation: If $2,000 a year was sufficient in 1981, and this is two decades later, how could that be sufficient today?
This version of the Portman-Cardin Bill covers five areas in addition to raising contribution limits on IRAs and on pensions, including 401(k)s. They are:
Portability. This removes barriers to some rollovers for job-changers, such as allowing funds to be moved between and among 401(k), 403(b), state and local government 457 plans and IRAs as an employee moves from job to job.
Faster vesting. Workers could gain access to their pension benefits after three years on the job instead of five.
Catch-up provisions. Workers older than 50 could contribute more than the stated lim its so they can catch-up for time spent off work (seen as especially beneficial for stay-at-home moms).
Regulatory reforms. They would make it easier for more small businesses to provide retirement plans.
Cash-balance disclosure. This would require employers to provide more information about an employee's options if they change the way pension benefits are accrued.
Mr. Portman first introduced this bill over a year ago. That version minus the IRA contribution increase was included in a sweeping tax-cut package vetoed by President Clinton.
It was resurrected this spring as part of a minimum wage and small business tax break package. That measure passed the House, but has since stagnated in the Senate, Mr. Portman said.
But he and co-sponsor Ben Cardin, a Democrat from Maryland, don't want to take the chance that it won't pass the Senate, so they plan to introduce the package as its own bill as late as mid-July.
That's when they will add the popular and high-profile IRA contribution increase. Mr. Portman acknowledges that while the bill has bipartisan support, its passage could be a feather in Republicans' cap come November.
The reason the leadership is letting me do it is that it's an election year, Mr. Portman said. But it's also the right thing to do.
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