Compliance July 7, 2001

HOUSE CALL – Pension Bill Overwhelmingly Passes House

July 19, 2000 (PLANSPONSOR.com) - The House overwhelmingly passed the Comprehensive Retirement Security and Pension Reform Act (H.R. 1102) Wednesday, but the President said it doesn't do enough for low-income workers, and said he "strongly opposes" the measure.

Reported by

Nevin E. Adams

The vote was 401-25 in favor of the bill, with 182 Democrats crossing the aisle to join near unanimous support from Republicans. The bill now goes to the Senate, with supporters pushing for action in early September.

The bill would:

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Gradually raise IRA contribution limits to $5,000 from $2,000
Lift annual 401(k) contribution limits to $15,000 from the current $10,500
Accelerate “catch up” limits for workers who leave the workplace temporarily
Enhance portability of benefits

A White House statement noted “A better approach is to enact pension and retirement savings incentives to reach tens of millions of working Americans who do not participate in employer-provided pension plans and have little or no retirement savings.”

A Democratic alternative modeled after government-subsidized retirement savings account proposals made by President Clinton was rejected 221-200.

See the bill online .

See a summary of retirement savings provisions included in the bill .

Reader Responses July 6, 2001

SURVEY SAYS: Bill Impacts

June 7, 2001 - We'll admit that with the bill not yet signed into law (today) - and the ink on the final bill barely dry - that yesterday's survey question might have come a bit early for some. But we were impressed with how many had already given it some thought - and were making preparations. According to our respondents, the catch-up contribution provisions for over-50 workers look to be the most impactful component of the legislation cited by nearly 22%. Next most frequently cited was the increase in the 401(k) limits (14%) and repeal of the same desk rule (11%), followed closely by the expansion of the deductibility limits in Section 404 and 415 (9%).

Reported by

Seven percent said the most impact would come from having to communicate the changes – and 12% said that “all” of the bill would be impactful. Other provisions cited included the repeal of the multiple use test, the ESOP dividend deductibility extension, tax credits for small employer expenses, vesting acceleration, and 457 rollovers to IRAs.

Verbatims from the survey:

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“The 404 and 415 changes will have the largest impact at our place of employment; our employer contribution is so heavy that we are limited to contributing 10%.”

“The provision that allows employees age 50 and older to contribute an additional $1000. These employees have the highest deferral percentage and make up 1/3 of our population.”

“The provision that would have the most impact on my job would be the 402(g) “catch-up” provision for older workers. As I see it we have 2 choices – spend all of our time trying to make our systems handle this (which they can’t), or spend all of our time explaining to our older workers why we are not allowing catch-ups. What a nightmare.”

And our favorite: “The biggest impact is going to be communicating to all 7,000 employees about the new provisions and then explaining that other rules will probably prohibit them from taking advantage of the higher dollar deferral maximum amounts.”

Thanks to everyone who participated in our survey!