On July 18, after an acrimonious mark-up, the House Ways and Means Committee approved, by voice vote, a scaled-down version of the Pension Preservation and Savings Expansion Act (H.R. 1776). Sponsored by Congressmen Rob Portman (R-OH) and Ben Cardin (D-MD), the bill is intended to build on the pension reforms enacted in the 2001 tax bill (P.L. 107-16).
H.R. 1776 would accelerate the 2001 law’s increased contribution limits for 401(k) pension plans to $15,000 and for IRAs to $5,000 in 2004, accelerating the contribution increases by two years and four years, respectively. The additional “catch-up” contribution limits for individuals age 50 and older also would be accelerated to $5,000 for 401(k) plans and $3,000 for IRAs in 2004. The bill would shorten the vesting period for employer contributions and would continue and increase the saver’s tax credit, first established in the 2001 law to encourage lower and middle-income taxpayers to contribute to retirement accounts. Portability of pensions also would be expanded and the age at which taxpayers must begin withdrawing funds from their IRAs would be raised from age 70? to age 75.
H.R. 1776 would alter the current basis on which corporate pension liability is calculated for three years, providing a temporary fix while Congress considers other options. Supporters contend that the new formula, based on a corporate-bond index, would more accurately determine pension liability. Republicans consider the issue to be a top priority, as the expiring rules have required companies to reserve increasingly larger contributions to fund their pension plans, leading some to freeze or drop their plans entirely.
Following the mark-up, the House debated H. Res. 324, a motion offered by the House Democratic Leader, Nancy Pelosi (D-CA), stating that the House of Representatives disapproved of the manner in which Ways and Means Committee Chair Bill Thomas (R-CA) conducted the mark-up and found that the bill considered at that mark-up was not properly reported and therefore should be sent back to committee for further consideration.
During the floor debate on the motion, Republican and Democratic members of the Ways and Means Committee argued over the sequence of events that occurred during the mark-up. The Committee Democrats were angered by the late release of the chair’s mark, leading them to request a full reading of the chair’s substitute during the mark-up. The Democrats left the mark-up shortly after the reading of the substitute commenced, and met in a nearby Ways and Means Committee room. According to the Democrats, Chair Thomas then called the Sergeant at Arms and the Capitol Hill police, asking that they be removed for creating a disturbance. No action was taken after the Sergeant at Arms and police arrived and the Democrats left the room, finding the mark-up was over.
The Republicans argued that it was not the presence of the Democrats in the nearby committee room that led the chair to call the Sergeant at Arms and the police, but rather the behavior of the remaining Democrat at the mark-up, who allegedly threatened another member of the Committee.
After a very partisan floor debate, a motion to table the resolution was approved, 170-143.
