Senate approves bill expanding 401(k)s, IRAs

Friday, September 8th 2000, 12:00 am
By: News On 6

WASHINGTON – A bill raising contribution limits for individual retirement accounts and 401(k) plans cleared the Senate Finance Committee on Thursday despite President Clinton's concern that it doesn't do enough to help low-income people save for retirement.

The legislation, expanding on a similar bill that already passed the House by a wide margin, was approved unanimously by the Finance Committee. It would raise annual contribution limits to 401(k) plans from $10,500 to $15,000 and to IRAs from $2,000 to $5,000.

So-called catch-up provisions would allow people age 50 and older to contribute up to $7,500 a year to an IRA. A new 401(k) would be created in which, like the popular Roth IRA named for Sen. William Roth, R-Del., people would contribute after-tax dollars but withdraw them tax-free for retirement.

The Clinton administration, which favors creation of tax-subsidized retirement savings accounts, has not threatened a veto but is opposing the legislation in part over the questions about helping low-income people.