Members of the House of Representatives sent a strong message to the Senate last week regarding the desire to solidify tax breaks for our aging society. In a 308-70 vote, with 115 Democrats joining 192 Republicans and one Independent, the House resoundingly voted to make permanent the retirement-related tax breaks that were created with the Economic Growth and Tax Relief Act of 2001.
Under the terms of the original act, annual contributions to Individual Retirement Accounts will increase from $3,000 to $5,000 by 2008, and annual contributions to employer-sponsored 401(k) and similar plans will increase from $11,000 to $15,000 by 2006. These provisions are scheduled to expire on December 31, 2010, at which time they will revert to the contribution levels in place in 2001.
The House bill would make the increased retirement contribution levels permanent instead of allowing them to expire.
The bill faces an uphill struggle in the Senate, where many are arguing that with the economy in a recession and the government spending more money on national defense and domestic security, it would be irresponsible to pass such a bill at this time.