Roth and Retirement Plan – the Names are Synonymous
The plan, unveiled in the Senate on Wednesday, would raise contribution limits for both regular IRAs and 401(k) plan. Furthermore, a new 401(k) option would enable people to contribute currently taxed dollars to a 401(k) and ultimately withdraw the money tax-free.
The bill would raise the annual 401(k) contribution limit from its current $10,500 to $15,000, and the IRA annual contribution limit would go from $2,000 to $5,000.
In addition, a proposed option would allow a catch-up provision for taxpayers who are over age 50, allowing them to contribute up to $7,500 per year to an IRA.
As usual, the White House has chosen not to support this measure, even though a similar bill passed in the House of Representatives earlier this year and many Democrats in both chambers support the measure. Clinton and Gore prefer legislation that would favor government-funded retirement plans for low-income people.
The retirement savings bill may find itself being used as a bargaining tool for other tax legislation under discussion.