The provisions fall into the following three themes: 1) Traditional savings accounts; 2) IRAs and their contribution limits; 3) Addressing minimum distributions from retirement accounts for seniors. Specifically, the legislation would do the following:
– Exclude up to $500 (twice that amount for married couples) of interest income from gross income annually.
– Permanently increase the IRA contribution limit from $5,000 per year to $16,500 (the current employer-sponsored plan limit).
– Temporarily double the contribution limit to employee-IRAs and employer-sponsored plans from $16,500 to $33,000.
– Temporarily increase the catch-up contribution cap for employee-IRAs and employer-sponsored plans to $10,000.
– Temporarily suspend requirements for minimum distributions from tax-deferred retirement plans. This provision mirrors legislation Rehberg introduced last Congress that permitted seniors to forgo their required minimum distribution from their IRAs, 401k accounts, or annuities. Currently if a senior does not take their required minimum disbursement (RMD) after age 70 ½, they are heavily penalized. Although Congress has temporarily suspended RMDs for the year 2009; this bill would extend that suspension through 2012 to allow further time for the market to stabilize.
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