House votes to increase pension and IRA contribution caps
WASHINGTON (CNN) -- By a veto-proof margin, the House overwhelmingly approved a measure Wednesday that aims to boost the allowable contribution amounts to Individual Retirement Accounts and 401(k)-type pension plans.
The final vote was 401 to 25, with 182 Democrats casting their votes for the bill, despite warnings from the White House that President Clinton might veto it.
Supporters of the bill say it will also streamline pension regulations and
make it easier for more small businesses to provide pension programs to their
"Over the past 20 years, Congress has made pensions less generous by
lowering the contribution and benefit levels, while also making pensions more
costly to offer by increasing the number of rules and regulations on
employers," Rep. Rob Portman, R-Ohio, the bill's author, said during floor debate.
But some Democrats, including President Clinton, have said they are
concerned the changes might benefit highly-compensated employees at the expense
of lower-paid workers.
A senior administration official told CNN the bill is "tilted too much toward the upper end of the income scale." But the official, who did not say if the president would veto the legislation, called the bill a "worthy goal."
Mr. Clinton did veto similar language last year, but it was attached to a
massive tax cut bill passed by Republicans. In its current form, the legislation that passed Wednesday is a stand-alone bill.
The bill would allow contribution limits to IRA's, which are now capped at
$2,000 annually, to rise gradually to $5,000 per year in 2003. Contribution
caps would be indexed for inflation after that.
Yearly salary contributions to 401(k)-type plans would rise from $10,500
at present to $15,000 by 2005. Other defined contribution pensions -- those popular with many large companies before the 401(k) became mainstream -- would be raised to 20 percent of compensation.
Workers over 50 would be allowed to contribute extra money right away in
order to "catch up" on their retirement savings.
The bill would also increase the portability of 401(k)-type plans and
shorten the vesting period from five years to three.