Lawmakers, women join nation's largest mutual fund in pushing IRA change

June 17, 1994|By Michael A. Fletcher | Michael A. Fletcher,Sun Staff Writer

WASHINGTON -- A group of lawmakers joined with several women's interest groups and the nation's largest mutual fund company yesterday to try to build momentum for legislation to increase the amount of money that nonworking spouses can invest in Individual Retirement Accounts.

At a Capitol Hill luncheon sponsored by Fidelity Investments, the financial services company, speakers urged support for the stagnant IRA legislation by casting it as an issue of fairness to women.

"This bill supports the notion that work inside the home is as

important as work outside the home," said Sen. Carol Moseley-Braun, D-Ill., told a luncheon attended by representatives of several interest groups, including Mothers at Home and the National Women's Political Caucus.

"It is a matter of equity and a matter of good policy," said Sen. Kay Bailey Hutchison, R-Texas, who is the bill's lead Senate sponsor.

The legislation would allow both wage-earning and nonwage-earning spouses to make $2,000 annual contributions to an IRA. Under IRA rules, nonworking spouses -- most of whom are women -- can contribute up to $250 annually to IRAs. In families with two wage earners, the annual IRA investment cap for each individual is $2,000.

Supporters of the bill noted that the difference can prove to be substantial over time. Under current rules, a two-income couple can invest $70,000 more in tax-deferred IRAs than single-income couples over a 40-year period. Assuming 6 percent annual investment returns, the two-income couple could save $300,000 more in an IRA than could a single-income couple.

That money could be a significant retirement resource to a nonworking spouse. If divorce splits a couple, for example, the IRA would give the nonworker a source of retirement funds.

Sen. Barbara A. Mikulski, D-Md., who is a co-sponsor of the measure, said the IRA would provide a nonworking spouse with an asset that is "portable, reliable and sustainable."

The Senate version of the bill has 59 co-sponsors, including Sen. Daniel Patrick Moynihan, D-N.Y., the chairman of the Senate Finance Committee, which would handle the legislation. But the measure has languished since being introduced in February.

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