Pension Reform: The Economic Growth and Tax Relief Reconciliation Act of 2001

Publication Date: January 2003

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

Type:

Abstract:

On June 7, 2001 the President signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16). Title VI of this law deals with pension plans and retirement savings accounts. P.L. 107-16 increases the maximum annual contribution to an individual retirement account (IRA) from $2,000 per individual to $5,000. It also increases the annual contribution limits on §401(k) plans, §403(b) annuities, and §457 deferred compensation plans for employees of state and local governments. Other measures are intended to encourage employers to offer pensions, increase participation by eligible employees, raise limits on benefits, improve asset portability, strengthen legal protections for plan participants, and reduce regulatory burdens on plan sponsors. The provisions of the law that reduce federal tax revenue are scheduled to sunset after 10 years.