Pension Reform Reintroduced

Essentially the same version of the Comprehensive Retirement Security Act (H.R. 10) that passed the House overwhelmingly last year was reintroduced in March by its principal sponsors, Rob Portman (R-OH) and Ben Cardin (D-MD). A very similar bill is scheduled to be introduced sometime in April in the Senate by Charles Grassley (R-IA) and Max Baucus (D-MT). Both bills would raise deductible contribution limits to defined contribution plans to 20% of pay, increase in stages the dollar limit on deferrals to 401(k) plans from the current $10,500 to $15,000, significantly increase the percentage of pay that could be deferred to a 401(k) plan (provided it is within the dollar limits), and increase portability of for retirement benefits.

For ESOPs, it would introduce changes that would make it difficult for companies to use S corporation ESOPs to avoid taxes for the primary benefit of just a few owners. It would also allow employees to reinvest dividends received on ESOP shares back into company stock on a pretax basis.

The bill seems likely to pass as it has few opponents in either the House or the Senate. The only obstacle would be if the costs of other tax changes forces revision of the bill's more costly provisions.

A Web site has been set up by proponents of the bill to coordinate lobbying efforts at www.passpensionreform.org.