House Republicans are offering their own plan to recover America’s retirement savings. Led by House Republican leader John Boehner, R-Ohio, the recently formed House GOP Savings Recovery Solutions Group unveiled its Savings Recovery Act Tuesday. The goal: allow Americans to rebuild their personal and retirement savings as quickly as possible – without government hindrance.
Republicans say they are committed to preserving 401(k)s and are focused on allowing Americans to make their own decisions regarding their retirement savings. They’re countering President Obama’s proposal to require all employers enroll their workers in an automatic IRA with the ability to opt-out.
Republicans say that approach – especially the notion of wiping out 401(k)s all together – is leaving retirement in the hands of bureaucrats, not families. “House Republicans are committed to preserving 401(k)s – and just as importantly, preserving workers’ ability to make their own decisions about their retirement savings,” states the Republican leader’s official Web site.
Obama’s budget also includes a proposal to expand the existing saver’s credit program to provide a 50 percent match on the first $1,000 of retirement savings made by families earning less than $65,000 a year.
What else is going into the Savings Recovery Act?
- Rebuild Americans’ retirement savings – The bill would raise contributions and catch-up limits for retirement savings plans. Current law generally requires a certain portion of retirement savings to be withdrawn after an individual turns 70 1/2 or retires. This requirement was suspended in 2009. The bill would extend the suspension of minimum withdrawals for an additional three years.
- Rebuild college savings – The current SAVERs Credit provides a tax credit of up to $1,000 for an individual filer and $2,000 for those filing jointly, for voluntary contributions to retirement savings plans. The Savings Recovery Act would extend the existing SAVERs Credit to contributions made to 529 college savings accounts as well, effectively reducing by up to half the cost of a family’s contribution to a 529 plan. The bill would also permanently allow families to change the investment direction of a 529 plan twice a year.
- Increase Retirement Income by Reducing the Social Security Earnings Penalty – The Savings Recovery Act would double the Social Security earnings limit from $14,160 to $28,320 and allow more Americans to increase their income without being hit by the earnings penalty.
- Tax Relief for Investors and Seniors – The bill would immediately suspend the capital gains tax on newly acquired assets for the next two years and would raise and index to inflation the amount of capital losses allowed against ordinary income to $10,000 – roughly the level it would be currently if it had been indexed to inflation when last modified. The bill would suspend taxes on dividend income through 2011.
- Stabilizing Worker Pensions and Helping Employers Invest in the Future – The decline in the stock market not only has consequences on Americans’ savings, but it is also placing a significant strain on employers and their worker pension plans. Rules requiring plans to recognize most of their losses in 2008 immediately and make up for those losses quickly are leaving many companies with unmanageable obligations, which could force employers to stop offering their pension plans altogether. To help ensure the viability of these worker pension plans, and allow employers to retain jobs and weather the economic storm, the Savings Recovery Act temporarily provides an increased glide path for recognizing losses and two additional years to resolve funding shortfalls. The bill would, however, require employers to continue making interest payments to their pension plans to prevent shortfalls from growing larger.
To learn more visit the House Republican leader’s Web site.