Among its other features, the 2001 tax cut provided significant expansions in opportunities for tax-preferred saving. Specifically, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) substantially raised the annual contribution limits on IRAs and 401(k) plans, increased the maximum benefit payable under defined benefit plans, and increased the maximum amount of compensation that could be considered in determining pension benefits. These saving-related provisions were drawn largely from earlier legislation co-sponsored by Representatives Rob Portman (R-OH) and Ben Cardin (D-MD). EGTRRA also provided a savers’ credit aimed at moderate income households, modeled after a provision that had been introduced in Senate pension legislation. The credit is not refundable, however, and so does not apply to many lower-income households. As with other EGTRRA rules, the saving-related provisions are phased-in over time and then sunset—the savers’ credit in 2006 and the other provisions by 2010.
A major new proposal would continue in the same direction as EGTRRA. On April 11, 2003, Representatives Portman and Cardin introduced “Portman-Cardin III.” Although no official revenue estimate is available yet, Representative Portman indicated the bill would reduce revenues by more than $100 billion over the next 10 years.