[Congressional Record Volume 143, Number 5 (Wednesday, January 22, 1997)]
[Senate]
[Pages S650-S651]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROTH (for himself, Mr. Lott, Mr. Breaux, Mr. Grassley, Mr. 
        Nickles, Mr. Murkowski, Mr. Abraham, Mr. Kyl, Mr. Helms, Mr. 
        D'Amato, Mr. Craig, Mrs. Hutchison, Mr. McConnell, Mr. Thomas, 
        Mr. Gordon H. Smith, Mr. DeWine, Mr. Inhofe, Mr. Bryan, Mr. 
        Roberts, Ms. Mikulski, Mr. Smith, Mr. Hatch, Mr. Bennett, Mr. 
        Kempthorne, Mr. Inouye, Mr. Enzi, Mr. Ford, Mr. Burns, Mr. 
        Lieberman, Mr. Hagel, Mr. Gramm, Mr. Dodd, Ms. Collins, Mr. 
        Gregg, Mr. Grams, Mr. Bond, and Mr. Kohl):
  S. 197. A bill to amend the Internal Revenue Code of 1986 to 
encourage savings and investment through individual retirement 
accounts, and for other purposes; to the Committee on Finance.


           the savings and investment incentives act of 1997

  Mr. ROTH. Mr. President, today we reintroduce the super IRA, a 
savings plan that is well-known as the Roth-Breaux super IRA.
  I'm honored again to be joined by Senator John Breaux, in introducing 
this bill. I believe now, as I did last Congress, that this is 
extremely well conceived legislation that succeeds in strengthening two 
fundamental components of our society: the family and the future of our 
economy. Much has been written and said about both of these lately, 
particularly as we look to a new century. Likewise, we're hearing more 
and more about the need to promote personal responsibility and self-
sufficiency.
  The Roth-Breaux super IRA will have a positive influence in all of 
these areas. Congress understands this. That's why Congress has passed 
similar legislation in the past. We all know that Washington must 
promote policies that strengthen family and create an environment where 
our economy can grow, this is why our IRA legislation in the past has 
been marked by a strong, cooperative, bipartisan spirit. In 1991, 
legislation similar to this had 78 cosponsors. In 1994, we had 58 
cosponsors and in 1995, 52 cosponsors. I believe this legislation will 
find similar support.
  Why? Because this super IRA will go a long way toward strengthening 
our families and restoring equity to work-at-home spouses and other 
workers without pensions. It will also boost our Nation's saving rate 
and lead to capital formation, increased investment and economic 
growth. The lack of saving in this country, as we all know, is a real 
concern. Chairman Alan Greenspan at the Federal Reserve says that the 
single most important long-term economic issue for this country is 
savings--savings that are essential for jobs, opportunity, and growth.
  This super IRA has been designed to address our Nation's need for 
savings

[[Page S651]]

and to provide families with as much flexibility as possible to use 
their savings not only for their security, but for the important goals 
and challenges in life. For example, this super IRA allows withdrawals 
to be made penalty-free to purchase first homes, to pay for college, 
and to cover expenses during extended periods of unemployment.
  This super IRA removes many of the Tax Code's barriers to retirement 
saving. First, this bill increases and phases out the IRA's income 
limits over 4 years, and increases the contribution limit to keep up 
with inflation. Furthermore, one of the key features of our bill is 
that we separate the IRA and the 401(k) or 403(b), so Americans can 
save the maximum in both, and so that spouses who work at home will not 
have their savings limited by their husband's or wife's 401(k).
  To strengthen the way this super IRA serves our families, this 
legislation not only allows parents to use penalty free withdrawals to 
help their children meet these goals and challenges, but children can 
use their IRA's to help their parents. Grandparents can make penalty 
free withdrawals to help grandchildren. And grandchildren can use their 
IRA's to help their grandparents. Our objective is to make this IRA as 
family oriented, as flexible and as useful as possible. It will go a 
long way toward promoting opportunity and reliance on self and family.
  Let me stress, this super IRA bill builds on what we did in the Small 
Business job Protection Act of 1996 and eliminates the unequal 
treatment of work-at-home spouses that now exists under current law. 
This bill allows spouses--husbands or wives--who work at home to make 
equal IRA contributions, up to $2,000, in their own accounts regardless 
of whether their spouse has an employer pension.
  With the super IRA, we also create a new type of individual 
retirement account--an IRA in which an individual's contribution is not 
tax deductible, but where the earnings can be withdrawn tax free if the 
account is open for at least 5 years, and the account owner is at least 
59\1/2\ when the funds are withdrawn.
  Mr. President, it's clear to see why this is a bill whose time has 
come. We have passed it before--in both Houses of Congress--now we must 
pass it again. It serves the individual. It serves the family. It 
serves the Nation. It is equitable, restoring spousal contributions to 
where they should be. It is flexible, offering penalty free withdrawals 
for life's necessities. It promises the vital capital formation America 
needs to invest in its future. And it builds upon the very important 
concept of self-reliance.
  Mr. BREAUX. Mr. President, today Senator Roth and I are introducing 
the Savings and Investment Incentive Act of 1997. We have introduced 
this bill in past Congresses but it is even more timely now as the 
pressure builds to secure the retirement of the baby boomers.
  The facts are staring us in the face. Within 30 years one out of 
every five Americans will be over 65. The baby boomers are 76 million 
strong, doubling the number of Social Security beneficiaries by the 
year 2040.
  At the same time, Social Security outlays will begin out pacing 
Social Security receipts in 2013 and the Social Security trust fund 
will be bankrupt in 2029 if we don't take the necessary steps to 
preserve it. And our national savings rate is only 1 percent of GDP. 
This is one-half of what it was in 1970. By comparison, we save half as 
much as the Germans and one-third as much as the Japanese. This is a 
serious problem. We need to address it by reducing the budget deficit 
and eliminating the drain it places on our national savings but we need 
to address it in other ways, as well.
  The Super IRA bill makes changes in the rules governing IRA's that 
will expand the availability of the IRA as a savings vehicle. The 
income caps will be eliminated over a 5-year period. Our bill creates a 
new kind of IRA that allows taxpayers to earn tax-free income. Funds 
can be withdrawn from either the current form of IRA or the new IRA to 
purchase a first home, meet a family's income needs during an extended 
period of unemployment or to pay for educational expenses.
  IRA's have broad bipartisan support as demonstrated by the list of 
cosponsors. I hope that we will work together to pass this legislation 
this year.
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