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- ICI Comment Letters
Investment Company Institute
Committee on Ways and Means
U.S. House of Representatives
February 13, 2001
As Congress considers tax relief for individuals, the Investment Company Institute (the "Institute")1 urges you to enact provisions that would encourage Americans to save for retirement. Retirement savings is of vital importance to our nation’s future. Members of the "Baby Boom" generation are rapidly approaching their retirement years. Additionally, individuals today are living longer. Taken together, these trends will place an enormous strain on Social Security — and the retirement security of Americans — in the near future. In order to ensure that individuals have sufficient savings to support themselves in their retirement years, much of these savings will need to come from individual savings and employer-sponsored plans.
The bipartisan legislation that was introduced by Representatives Rob Portman and Ben Cardin, the "Comprehensive Retirement Security and Pension Reform Act," and passed by the House of Representatives last year, would make the nation’s retirement plan system significantly more responsive to the retirement savings needs of Americans. By providing appropriate tax incentives to individuals, the legislation would encourage retirement savings. Furthermore, the bill would eliminate many of the unnecessary restrictions that discourage employers from establishing retirement plans and individuals from saving for retirement.
Major provisions of the bill would:
- increase the annual limit on IRA contributions in stages from $2,000 to $5,000;
- permit persons 50 and older to make "catch-up" contributions to their IRAs and employer-sponsored plans;
- increase contribution limits for 401(k), 403(b) and 457 plans in stages to $15,000;
- increase contribution limits for SIMPLE plans in stages to $10,000;
- increase pension portability; and
- reduce regulatory burdens.
These and other retirement savings proposals included in the bill would (1) improve incentives and opportunities for Americans to save adequately for their retirement, (2) accommodate the work and savings patterns of today, and (3) simplify the rules applicable to employer-sponsored plans and IRAs, which would result in a greater number of employer-sponsored plans, a higher rate of worker coverage and increased individual savings. The Institute urges Congress to help Americans achieve greater security in their retirement years by enacting these proposals.