WASHINGTON - The House overwhelmingly passed a bill raising contribution limits for individual retirement accounts and 401(k)s on Wednesday, hoping to boost Americans' anemic savings rate. President Clinton said the measure doesn't do enough for low-income people but did not threaten a veto.
The House voted 401-25 to send the measure to the Senate, with 182 Democrats joining nearly all Republicans in favor. Senate supporters say they will push for action in early September.
Sponsors called the bill a partial answer to a U.S. savings rate that recently dropped to zero as a percentage of after-tax income and remains at Depression-era levels. The aging baby boom generation also faces a Social Security system in future financial jeopardy - and 75 million Americans have no employer-sponsored retirement plan.
''We are committed to helping all Americans have more peace of mind, and more financial security, in their retirement years,'' said Rep. Rob Portman, R-Ohio.
The bill, which would reduce government revenue by $52.2 billion over 10 years, would gradually raise annual IRA contribution limits from $2,000 to $5,000 and boost annual 401(k) plan contributions from $10,500 to $15,000.
People over age 50 would have accelerated ''catch-up'' limits, which would particularly benefit women who left the work force temporarily to care for children. Several changes would be made in federal pension rules to encourage more employers to offer pensions and permit workers to carry retirement plans from job to job.
''This encourages employers to continue to put money on the table to help lower-wage workers,'' said Rep. Ben Cardin, D-Md. ''It's a well-balanced approach.''
IRAs were authorized in 1974 but contribution limits have been increased only once, by $500 in 1981. More than 36 million people now participate in 401(k) plans - roughly a third of the U.S. work force - but the average account balance is only about $37,300, the Employee Benefit Research Institute says.
At the same time, traditional employer-provided pension plans have dropped from 114,000 in 1987 to 45,000 in 1997, and only about half of people over age 65 receive income from pensions.
''The work force has changed, our 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.''
Despite the lopsided bipartisan vote, the White House released a statement saying the president ''strongly opposes'' the bill because it would mainly add to retirement tax benefits for higher-income people rather than the lower-income workers most in need of help saving money.
''A better approach is to enact pension and retirement savings incentives to reach tens of millions of working Americans who do not participate in employer-provided pension plans and have little or no retirement savings,'' the White House statement said.
A Democratic alternative modeled after government-subsidized retirement savings account proposals made by Clinton would provide a 50 percent federal tax credit - a maximum of $1,000 - for lower-income worker contributions of up to $2,000. The credit, which would cost more than $155 billion over 10 years, would phase out above $75,000 income for a married couple, $37,500 for a single taxpayer.
''The problem isn't so much what's in'' the main bill, said Rep. Earl Pomeroy, D-N.D. ''The problem is what's left out.''
But the House voted 221-200 to defeat the Democratic alternative. Republicans insisted their bill would help lower-income workers by making it easier for employers to provide pensions in the first place.
''Employers maximize their benefits and, in fact, it maximizes the employees' savings capability,'' said Rep. Bill Thomas, R-Calif. ''It fits our needs today.''
Senate Finance Committee William Roth, appearing with House supporters at a news conference before the vote, noted that the Senate endorsed a similar approach in votes last week and said he would push for final passage this fall in the waning days of the congressional session.
''Even though it's late, it's not too late to get this legislation through,'' the Delaware Republican said. ''This bill goes a long, long way toward helping Americans prepare for retirement.''
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