[Congressional Record (Bound Edition), Volume 147 (2001), Part 4]
[Extensions of Remarks]
[Page 5815]
[From the U.S. Government Publishing Office, www.gpo.gov]



                  THE RETIREMENT SECURITY ACT OF 2001

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                        Wednesday, April 4, 2001

  Mr. NEAL. Mr. Speaker, today I am introducing along with Messrs. 
Rangel, Matsui, Coyne and Andrews, the Retirement Security Act of 2001. 
This legislation expands and improves pension coverage for low- and 
moderate-income workers, by providing a direct incentive for these 
workers to save for their retirement through pension plans offered by 
their employers or through an Individual Retirement Account (IRA).
  There are three provisions in this legislation. First, the savings 
proposal allows eligible low-and moderate-income taxpayers to receive 
up to a 50 percent tax credit for contributions to an IRA or to an 
employer sponsored defined contribution pension plan, like a 401(k) 
plan. The credit is refundable so that workers who have little hope of 
saving for retirement right now might be encouraged to do so under this 
bill. It is this group of workers who are most at risk of retiring 
without adequate retirement savings, and it is this group which has 
proven to be the most difficult to bring into the pension system. They 
need additional incentives to help get them off the ground, which is 
why a refundable credit is key to any proposal to expand pension 
coverage to this group.
  The 50 percent refundable credit would be available for single 
taxpayers with adjusted gross incomes up to $12,500, and up to $25,000 
for joint returns. The credit amount phases down from fifty percent to 
zero between $25,000 and $75,000 on a joint return. The maximum credit 
amount would be $1,000. The credit would be claimed on the federal 
income tax form. While it might be more appealing to workers if the 
money was given to them up front, a tax credit provides the most 
efficient form of delivery.
  The next two provisions of the bill provide tax credits to small 
businesses to expand pension coverage and participation. First, a small 
business tax credit would be given to small employers of 100 or less 
employees equal to 50 percent of administrative and retirement 
education expenses for the first three years of a newly established 
qualified pension plan.
  The second small business credit would be for employer contributions 
to new qualified pension plans, also for up to three years. Under this 
provision, small employers could take a 50 percent tax credit for 
employer contributions made to any pension plan on behalf of any non-
highly compensated employees covered under the plan. All of these 
provisions would generally be effective after December 31, 2001.
  Mr. Speaker, this is a summary of the provisions contained in this 
bill. I believe it directly and firmly addresses the issues of pension 
coverage, participation, and savings for a group of workers who need 
this help because they are currently excluded from our pension system. 
This bill would expand the number of employees covered by plans and 
would provide a strong incentive for many individuals in a plan to save 
additional amounts for their retirement. In addition, the bill provides 
needed incentives for small businesses to offer pension coverage to 
their employees.
  I hope the Committee on Ways and Means will consider this approach 
carefully as an addition to any pension legislation that the Committee 
adopts this year.

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