[Congressional Record Volume 145, Number 2 (Thursday, January 7, 1999)]
[Extensions of Remarks]
[Page E46]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                             THE WISE BILL

                                 ______
                                 

                           HON. BILL McCOLLUM

                               of florida

                    in the house of representatives

                       Wednesday, January 6, 1999

  Mr. McCOLLUM. Mr. Speaker, today I take great pride in introducing 
the Women's Investment and Savings Equity Act of 1999, the WISE bill. 
Joining me in this effort is my colleague from Washington, Ms. Jennifer 
Dunn. 
  The old proverb ``a penny saved is a penny earned'' has more truth 
today than people realize. Savings is not only a critical part of 
American's retirement security, but our long-term economic growth 
depends largely on what we save today. After all, the economy cannot 
grow unless there's an adequate supply of capital to invest. Money 
saved for retirement, whether it is through savings accounts, IRA's or 
employer-sponsored pensions, is a primary source of private investment 
capital.
  Unfortunately, today's punitive, complex Tax Code encourages 
consumption while savings and investment are generally discouraged. Low 
savings rates means reduced growth potential. It also means a lower 
quality of life when the retirement years arrive.
  In an effort to stimulate savings, the WISE bill would make some much 
needed changes to our Tax Code as it pertains to savings for parents, 
especially women. Right now, parents who take unpaid maternity or 
paternity leave have no way of making up pension contributions once 
they return to the work force. Many parents also realize that it may 
not be possible for both parents to work while raising a child. Even if 
both do, there may not be enough money to make pension contributions.
  The lack of savings opportunities I have just described would be 
removed if we enacted the WISE bill. The WISE bill would allow those 
coming off of unpaid maternity or paternity leave to make up 
contributions to their employer-sponsored pension, for example, 401(k), 
that they would have been able to make had they not been on leave. The 
legislation would allow the person 3 years to make up the missed 
contributions.
  The WISE bill would also allow parents who do not make contributions 
to their pension while raising a child, regardless of whether the 
parent has left the work force or if they simply cannot make a 
contribution due to other expenses, to make up those contributions at a 
later date. After all, piano lessons will sometimes come before 
retirement savings. For example, if a parent does not make 
contributions for 13 years while raising a child, he or she will have 
13 years to make up the contributions. The make-up contributions will 
be equal to the lesser of what the parent could have otherwise 
contributed, of 120 percent of the contribution limit minus what is 
being contributed that year. For example, a $50,000 earner with a 
401(k) allowing for a 5-percent deferral, $2,500, as defined by the 
employer could contribute his or her normal $2,500 plus another $2,500 
if it is a make-up year. The added $2,500 is the lesser of the plan 
limit, $2,500, or 120 percent of the legal limit, $11,400, minus 
$2,500, the contribution already being made. The legal limit of a 
401(k) is $9,500.
  These reforms are needed to remove the inequities that parents, 
especially women, face when it comes to savings for retirement. This 
would clearly spur additional personal savings. More savings equals an 
increase in retirement income, a reduction in dependence on 
entitlements and much needed economic growth. For all these reasons, it 
is imperative that we make retirement savings more attractive and 
easier for parents who face unique financial strains. The WISE bill 
does just that. I urge my colleagues to support this needed reform.




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