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URL:  http://boards.fool.com/certain-elements-are-indeed-characterizing-this-14929323.aspx

Subject:  Re: New bill Date:  5/8/2001  4:13 PM
Author:  mwyattea Number:  29548 of 75383

Certain elements are indeed characterizing this bill as "geared towards the rich"; however, a couple of points are in order.

1. Many of the "increased" limits are just restoring these amounts back on an inflation adjusted basis (and in many cases not even close) to where they were in the mid-80s before Congress cut back these limits to take care of the deficit. As an example, the $2,000 IRA limit hasn't changed since 1978.

2. From a small employer standpoint, increasing these limits also increases the chance that some form of plan will be established to cover their employees. If the carrot of increased contributions for the owner has to be extended, so be it. (Remember, sponsorship of a qualified plan is not a requirement. If rules are restricted to the extent that the owner would be better off not having a plan at all and just investing the after-tax proceeds of what he was prepared to contribute in aggregate, what do you think the odds are of his employees seeing anything?)

You're 20 years old right now, and it's good that you're focusing on this issue. Remember though, one constant is that everyone gets older and your focus as to what is "fair" will change over time.

BTW, I'm a pension actuary and have been in the field since 1983, primarily focusing on small employer plans. I've lived through the negative wave of more restrictive bills starting with TEFRA back in 1982, the Tax Reform Act of 1986, and OBRA '93, and the resultant shutdown of plans during that time. Having Congress finally taking steps to encourage plan sponsors is refreshing and may help to prop one of the "three legs" of retirement savings (Social Security, Private Plans, and personal savings).
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