On October 8, the House Ways and Means Committee approved, 24-10, legislation (H.R. 5558) that would allow taxpayers to make increased contributions to their retirement savings plans, including Individual Retirement Accounts (IRAs) and 401(k)s.
Current law increases the contribution limits for both the traditional and Roth IRAs to $5,000 by 2008 and raises the amount that an individual may contribute annually to a 401(k) plan or a tax-sheltered annuity to $15,000 by 2006. The law gradually increases the limit on contributions to a simplified employee pension plan to $10,000 in 2005.
Sponsored by Committee Chair Bill Thomas (R-CA), H.R. 5558 would accelerate the scheduled increases in the contribution limits to an IRA from $3,000 this year to $5,000 in 2003 instead of 2008. Contributions to 401(k) plans and tax-sheltered annuities would increase from $11,000 this year to $15,000 in 2003 instead of 2006, and the limit on simplified employee pension plans would increase from $7,000 this year to $10,000 in 2003 instead of 2005.
The legislation also would accelerate the catch-up contributions for individuals aged 50 and older. The contribution limit for IRAs would increase from $500 this year to $1,000 in 2003 rather than in 2006. The limit on contributions to 401(k) plans and tax-sheltered annuities would increase from $1,000 this year to $5,000 in 2003 instead of 2006, and on simplified employee pension plans from $500 this year to $2,500 in 2003 instead of 2006.
Additionally, the bill would increase the age at which individuals must begin withdrawing money from their IRA and 401(k) plans from age 70 ? to 75 by 2007.
The provisions in H.R. 5558 are also included in a larger measure (H.R. 5553) sponsored by Reps. Rob Portman (R-OH) and Benjamin Cardin (D-MD).
