EGTRRA Permanency
Provisions in the House- and Senate-passed pension bills
March 2006
Makes permanent the EGTRRA provisions that relate to retirement plans and IRAs including increased contribution limits and catch-up provisions (House bill) that would otherwise expire after 2010. As a result, employers can count on existing limits and other provisions that became law in 2001 staying in place. Of all the provisions in both pension bills, plan sponsors and participants are likely to be most interested in EGTRRA permanency.
If allowed to expire in 2010, the resulting disruption and associated costs to our clients would be significant. For example, the annual contribution limits—now set at $15,000—would revert to pre-EGTRRA limit of $8,500 (plus indexing subsequent to 2001). IRA limits also would roll back from the phased-in $5,000 (in 2008) to a pre-2001 $2,000 annual limit. While this would most impact those participants that make the maximum contribution, it also is critical to helping our participants reach their full retirement security potential. Other administrative efficiencies achieved with EGTRRA would be reversed and plan sponsors would lose the more flexible payout schemes returning to a more restrictive regime.