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The Bill That Didn't Pass

03/01/01 03:11:58 PM PST
by Bruce R. Faber

So why isn't your IRA limit $5,000 instead of $2,000?

"Huge House majority passes bill to increase IRA contribution to $5,000 per year!" That was the tease, or something like it, from the networks one day in the summer of 2000. Either it was a slow news day, or they must have felt it to be an event of some importance. I certainly thought the latter was the case, and the commentators seemed to agree. It was one of the top stories in the national broadcasts. No matter what channel I switched to, ABC, NBC, CBS, CNN, the broadcasters there were talking about it. No doubt about it -- it was news!

The talking heads went on to report the story along these lines: "Today, the US House of Representatives passed House Bill 1102 by a 401-to-25 margin. The Comprehensive Retirement Security and Pension Reform Act is an attempt to bring the IRA savings opportunity back in line with what has been lost to inflation," they explained. You see, in the years since the $2,000-per-year limit was set, inflation has eaten up more than three-fifths of the dollar's value. The $5,000 yearly contribution would not be an increase as much as it would be a return to the previously set percentages, they went on to say.

The new limit would be reached by three consecutive $1,000-per-year increases and thereafter be pegged to inflation. In addition, people over the age of 50 would be able to deposit one and a half times the base amount to help catch up with the inflation gap and be better prepared for retirement. The bill, which was introduced by US Representative Rob Portman (D-OH), looked promising; it had broad support in the House with 200 cosponsors, almost half of whom were Democrats. The bill was scheduled to go to the Senate for further action.

Great, I thought. What a great topic for me to use for an article for Working Money! So I did, confidently assuming that the bill would have passed both houses of Congress by the time the piece saw print. In the article, I explained that "in one of the wisest moves made in recent memory by politicians, the US Congress raised the amount per year that can be contributed to an Ira account. Even more impressive, the contribution ceiling was more than doubled, from $2,000 to $5,000 per year." I used that as a basis to explain how buying a used car instead of a brand-new one could save more than half a million dollars. That can be done -- but I was wrong to assume that the bill would pass into law by the time the story saw print. I was naïve. I apologize.

I thought it was a done deal at the time, but clearly I was wrong. As of January 23, 2001, our IRA increase was still being held captive by the US Senate.


Counting chickens before they hatch can leave you with a lot of eggs -- on your face. House Bill 1102, which contained the change from $2,000 to $5,000 for IRAs, was passed by the US House of Representatives on July 19, 2000, and sent to the Senate the next day. Its first reading for the Senate was on July 27 and the second reading was on September 5, at which time it was referred to the Senate Committee on Finance. By September 13, the Senate Committee on Finance had amended the bill and the title and placed it as no. 802 on the Senate Legislative Calendar -- and it never went any further. That was the end of HR 1102, but not the end of the story.

If I have tracked the series of events that followed accurately -- and I have not found anyone, including some very close to the story, who can tell me for sure -- this is what happened next. In the final days of the 106th Congress in 2000, the House majority leadership put together an aggressive tax-cut bill. This bill, HR 2614, combined several bills, one of which was HR 5542, entitled the "Taxpayer Relief Act of 2000." That act contained more than 20 segments of 1102, including the IRA increases that I was referring to in my original article. It also included segments that the President had been adamant about rejecting.

HR 2614 was passed by the House on October 26, 2000, and by Halloween, it had jumped a number of legislative hurdles and been brought to the Senate floor. As the news media made it abundantly clear, because of those segments in dispute, the huge tax-cut bill was headed for a threatened Presidential veto. As a result, HR 2614 never left the Senate and died when the 106th Congress adjourned.


Speaking with Representative Portman's office on January 23, 2001, I was advised that the bill, as passed by the 401-25 margin last year, would be reintroduced. We can only hope that by the time you read this, some version of the bill will have made it through the political obstacle course, and future articles about the power of Ira savings will be based on the larger contribution amounts. If this is not the case, join me in writing to our US senators and encouraging them to get off of our dimes!

The chairmanship of the Senate Committee on Finance has fallen to Chuck Grassley (R-IA), so we'll have to keep an eye on Senator Grassley to see how he handles the future of our money. (See sidebar, "Helpful notes," for any aid you can give him and your own senator in urging him to support the bill.)

There are pros and cons in nearly all bills. Although this bill has shown much progress, it did not make it through Congress -- at least not in the time frame that I was sure it would. With any luck, it will soon.

A good place to follow this or any other bill is the Thomas Legislative Information site on the Internet. More details about the status of HR 1102 can be found at:

  • @@@S|/bss/d106query.html

    Here are some sites you might find interesting if you want to contact a member of the Senate Finance Committee or do more research on this subject.

  • Chuck Grassley (R-IA), chairman of the Senate Finance Committee:

  •   135 Hart Senate Office Building
      Washington, DC 20510
      Phone: 202 224-3744
  • Senate Finance Committee:

  • Thomas Legislative Information:

  • Senate version of HR 1102:

  • Differences in House and Senate versions of HR 1102:

  • Parts of HR 1102 included in HR 2614:

  • Problem areas of HR 1102:

  • Support for HR 1102:

  • Opposition to HR 1102:

    Bruce Faber can be reached at

    Faber, Bruce R. [2001]. "How To Save $13.25 Per Mile. Really!" Working Money, Volume 2: January/February.

    Bruce R. Faber

    Title: Staff Writer
    Company: Technical Analysis, Inc.
    Address: 4757 California Ave. SW
    Seattle, WA 98116
    Phone # for sales: 206 938 0570
    Fax: 206 938 1307
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