Saturday, May 26, 2001

Tax-relief plan offers incentives




By Derrick DePledge
Enquirer Washington Bureau

        WASHINGTON — New incentives for people to save more for retirement were added to a compromise tax-relief package that Congress is likely to approve today.

        House and Senate negotiators agreed to increase the contribution limits to Individual Retirement Accounts from $2,000 a year to $5,000 a year. Employee contribution limits to 401(k) and 403(b) plans would increase from $10,500 a year to $15,000 a year. Workers over 50 would be able to set aside even more money annually because they are closer to retirement.

        Low-income workers would also be encouraged to save through government tax credits, sources said, although the details — and the timetable for when pension reform would take effect — were not available late Friday.

        “Millions of Americans will now have a more comfortable retirement,” said Rep. Rob Portman, R-Terrace Park, who sponsored pension reform in the House with Rep. Benjamin Cardin, D-Md. “This is a huge victory for American workers.”

        The House approved similar provisions six times in the past few years, but the legislation always caught a snag in the Senate or from the Clinton administration, which wanted to provide more savings incentives for low-income workers.

        President Bush did not recommend pension reform in his tax-relief proposal, but the House approved the changes this month and the Senate included the provisions in its version of the tax package.

        Pension reform was endorsed by a coalition of business, securities and insurance interests, but some liberal public-policy groups doubt the provisions would help low- and moderate-income workers who cannot afford to divert much of their salaries into savings accounts.

       



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