IRAs suddenly of great interest to Washington

Two individual retirement account measures were proposed last week, one that attempts to encourage more Americans to save for retirement and another that would make inherited IRAs less valuable in many cases. Sen. Richard Neal, D.-Mass., introduced HR 4049, which would require companies to automatically offer employees access to an IRA if they don't already sponsor a qualified retirement plan. It would allow for a few exemptions for small businesses and new firms. The American Society of Pension Professionals & Actuaries supports the plan, which would provide small employers a tax credit for offering automatic payroll deductions to employees to help them save for retirement. Brian Graff, chief executive of the association, said he expects once firms participate in such automatic savings, they will be more likely to offer employees a 401(k) retirement plan. Today about 78 million American workers, about half of U.S. workers, don't have an employer-sponsored retirement plan and most party leaders – including President Barack Obama -- agree that such a proposal is a great way to help even out the retirement savings playing field for the other half. Sen. Jeff Bingaman, D., New Mexico, introduced an auto IRA bill in September in the Senate. In the second IRA proposal brought up last week, Sen. Max Baucus, D-Mont., introduced a provision in a highway bill that could hurt the benefits of those who inherit IRAs. The provision, which Mr. Baucus said would generate $4.6 billion over a decade, would no longer allow everyone to defer paying taxes over their lifetimes on IRAs that they inherit. Instead, only a spouse, minor child or a disabled beneficiary would still get this benefit, while others (including adult children) would have only five years to defer paying taxes on the account. The Financial Services Institute is one of the groups fighting this idea, arguing the proposal would deter savings at a time when Americans' savings already are strained.