Think about how much has changed since 1981. Back then Iran had just released American hostages; Lech Walesa’s leadership of an independent trade union in Poland led to his arrest; and a new cable channel was begun — airing only music videos.

That year, the House of Representatives approved an increase in the tax-deductible amount Americans could invest annually in individual retirement accounts, raising it by 33%, to $2,000. In the two decades since then the world has changed. The Ayatollah and the Iron Curtain are gone. Music videos are all too commonplace. But for many Americans their savings and investments are hamstrung by the limit established by the 97th Congress.

It is time for the 106th Congress to raise the IRA contribution limit to $5,000. This is a political year, but raising the IRA limit should not be a political issue. Such legislation has not only bipartisan support but also common sense on its side. When adjusted for inflation, 2,000 1981 dollars are equivalent to more than $5,000 today.

Consider this: A 25-year-old invests $2,000 a year in an IRA, gaining a modest 8% return. By the time he is ready to retire, he has amassed $518,000. That is a nice nest egg, but compare this result to that of another investor, permitted to invest $5,000 annually under the same terms. She would be a millionaire at retirement, with $1,295,283 of savings. Now just think about the more comfortable retirement our second investor would have compared with our first. He may have to move to a small apartment, make do with the old car, and worry about outliving his savings. She will live the life she dreamed of, with peace of mind and money to spoil her grandkids.

IRAs help working men and woman save for retirement; 83% of IRA participants make less than $50,000 a year. Sure, not everyone may be able to save $3,000 a year more, but the government should be encouraging savings and investment, not limiting it.

Critics — and there are not many, considering that a bill to raise the contribution limit twice got 401 votes in the House — use the tired claim that this bill doesn’t help low-income Americans enough.

The Senate version, which was approved by a unanimous Finance Committee, includes a tax credit for low-wage earners. Cutting red tape surrounding employer-sponsored accounts would help more small businesses offer retirement plans to their workers of all income levels. Moreover, a “catch-up” provision lets people who have been out of the work force for a time, such as stay-at-home moms, make extra contributions when they return. And it encourages young people to begin saving.

This bill helps low- and middle-income people, small businesses, and mothers. It has everything but apple pie. It has passed the House twice, and it is time to schedule a vote in the Senate.

The clock is winding down on this session of Congress. The Financial Services Roundtable, its member companies, their employees, and customers urge a vote on a “clean” retirement savings bill. It’s time for the Senate to schedule a vote.

It’s time to tear down the archaic and arbitrary savings limit and free the American people to save for their golden years.


Mr. Bartlett is president of the Financial Services Roundtable, representing 100 of the nation’s largest financial services firms.

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