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American Morning
Congress May Increase Retirement Contribution Limits
Aired May 02, 2001 - 09:08 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LEON HARRIS, CNN ANCHOR: Well now, on to Washington, where lawmakers are tackling issues affecting your money. The House is scheduled to vote today on a bill that would allow you to put more money into your 401(k) plans and your IRAs as well.
Our congressional correspondent Kate Snow joins us now from Capitol Hill. She's got the details on all that.
Good morning, Kate.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Good morning, Leon.
Sponsors of this measure say that Americans, quite simply, are not saving enough for their retirement and they want to give them a little boost here. Federal law doesn't require that employers provide retirement saving programs, but it does set the rules up for those plans.
And in the 1980s, the rules were changed a little bit. The Congress made a little bit more complicated for employers. They also reduced the limit on what people could put into retirement saving plans if they were contributing to them. And so this bill basically attempts to reverse that.
(BEGIN VIDEO CLIP)
REP. ROB PORTMAN, (R) OHIO: The basic thrust of the bill is threefold.
First it lets everybody save more for their own retirement. That means people can put more into a 401(k). It goes from about $10,500 to $15,000 a year. People can put more into an IRA. It goes from about $2,000 a year now to $5,000 a year.
(END VIDEO CLIP)
SNOW: Now, the bill would do a couple more things. It would reduce vesting requirements, allowing employees to qualify for the full amount of matching funds, not in five years, but down to three years. And also there are about 50 provisions aimed at simplifying the rules for small businesses to establish and expand retirement plans -- all of this supported overwhelmingly in the House.
As a matter of fact, there are more than 300 co-sponsors of this legislation. About 400 members voted for it last year.
But some Democrats are a little bit concerned. They say that they want to add more to this bill. They argue that only a small percentage of people are really contributing the maximum to their retirement plans. And so, therefore, it's the little guys, it's the lower-income people that need more help in saving that money. They're going to offer some provisions this afternoon to give tax credits to lower-income Americans who contribute to 401(k)s or IRAs.
HARRIS: All right, Kate, what about the rest of the tax picture and President Bush's tax cut plan? What's the latest word on that? Has the compromise process been completed yet or what?
SNOW: There was a compromise reached yesterday, Leon. You'll remember that the Senate and the House both passed budget plans a couple weeks back. They were very different in their numbers on what the tax cut should look like. The House wanted a lot more -- House Republicans, in particular -- and the Senate wanted a little less.
Well they've settled, it looks like, on $1.35 trillion over 11 years. That's a little bit less than President Bush's $1.6 that he kept touting, but it's enough to satisfy some of the more moderates and the conservatives.
They've also, Leon, settled, at least tentatively at this point, on an agreement about spending. That was the main question holding them up: What kind of spending increase should they provide for? The president wanted 4 percent increase in spending this year over last year on things like defense and education and transportation. Some others wanted 8 percent. Well, it looks like they've settled on about 5 percent. They're going to be meeting now, this hour, Leon, to work out the details.
HARRIS: All right, good deal, Kate Snow on Capitol Hill this morning, thanks. We'll talk to you later on.
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