WASHINGTON — The House on Wednesday overwhelmingly approved a bill sharply increasing the contribution limits on individual retirement accounts and 401(k) plans, proposals aimed at boosting savings by Americans.
The bill is the latest in a series of tax-related measures that the Republican majority is moving through Congress. President Clinton and Democratic congressional leaders have been complaining that the bills fail to provide significant benefits for low-income people.
But in Wednesday's vote, Democrats ignored their president and party leaders in massive numbers. The legislation passed by a lop-sided vote of 401 to 25.
The bill would increase the maximum contribution to IRA accounts from the current figure of $2,000 a year to $5,000 by 2003. For those nearing retirement--people 50 and older--the $5,000 contribution would begin next year.
The bill also would boost the amount workers may contribute to the popular 401(k) plans from $10,500 a year now to $15,000 annually by 2005.
The profits earned in these investment accounts grow tax-free.
The country's "retirement needs have changed and the pension system has changed," said Rep. Bill Archer (R-Texas), chairman of the House Ways and Means Committee. "This is the right legislation at the right time."
Senate Finance Committee Chairman William V. Roth Jr. (R-Del.) said Wednesday that he is hopeful the Senate will adopt the measure later this year.
The Senate approved a similar plan last week as an amendment to a bill to repeal the estate tax, but the retirement-program provision was stripped from that legislation before final passage.
Clinton 'Strongly Opposes' Measure
Despite bipartisan support for the House bill, a White House statement said that Clinton "strongly opposes" the bill because, in his view, it largely would benefit higher-income people. The statement said that a "better approach" would offer savings opportunities to lower-income Americans who do not participate in pension programs.
Clinton favors government-subsidized retirement savings accounts for lower-income people that would provide a 50% federal tax credit--up to $1,000--to match worker contributions.
But the House defeated a Democratic-backed bill, 221 to 200, modeled on Clinton's plan.
Along with passage of the retirement program bill, Congress in the last week has approved the estate tax repeal and a measure to cut taxes for married couples. But with Clinton opposing all the measures, their fate remains unclear.
