Publication Date: October 2003
Publisher: Library of Congress. Congressional Research Service
Author(s):
Research Area: Labor
Type:
Abstract:
H.R. 1776, (Portman/Cardin) the Pension Preservation and Savings Expansion Act was ordered to be reported (as amended) by the Committee on Ways and Means on July 18, 2003. Among the major provisions of the bill, it would: accelerate the scheduled increases in contribution limits to individual retirement accounts and employer-sponsored plans, as included in the EGTRRA of 2001; expand and extend a non-refundable income tax credit for low- and moderate-income individuals who contribute to a qualified retirement plan; replace for three years the interest rate on 30-year Treasury bonds as the rate used by defined benefit plans to calculate funding ratios with a rate based on an index of high-quality, long-term corporate bonds; allow up to $2,000 of certain retirement annuity income to be free of income taxes during each of the first 5 years such income is received; raise the age at which participants must begin to take distributions from pension plans and individual retirement accounts from 70½ to 75, and reduce the excise tax for not taking distributions from 50% to 20% of the amount not distributed; accelerate the schedule on which employees must be fully vested in an employer's contributions to a defined contribution plan; allow nontaxable transfers of IRA of assets to the IRA of a spouse or former spouse; increase the permissible deduction for employers that maintain both a defined benefit and defined contribution plan; allow public-safety employees to take distributions from a Deferred Retirement Option Plan before age 59½ without being subject to the 10% penalty for distributions made before age 59½; allow small employers to make additional contributions to SIMPLE retirement plans; allow disabled persons to contribute to individual retirement accounts (IRAs).
The sections of H.R. 1776 that amend provisions of law enacted by the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA," P.L. 107-16) are subject to the "sunset" provision of section 901 of EGTRRA, which provides that the Act shall not apply after December 31, 2010.
The provision of H.R. 1776 that would replace the interest rate on 30-year Treasury bonds as the rate used by defined benefit plans to calculate funding ratios with a rate based on an index of high-quality, long-term corporate bonds was introduced as a separate bill, H.R. 3108 (Boehner), on September 17, 2003.
This report will be updated as further legislative developments occur.