Republicans announce plan to rebuild savings

WASHINGTON -- A series of proposals unveiled Tuesday by U.S. Rep. Dean Heller of Nevada and a group of other House Republicans aim to help people rebuild shattered retirement funds and college savings accounts.

The Savings Recovery Act would increase the limits on what can be contributed to individual retirement accounts, including "catch-up" contributions allowed for people older than 50.

It also would grant a tax credit up to $2,000 per family for contributions made to so-called "529" college savings plans.

The proposals were put together by Heller and 11 others on a task force appointed by House Minority Leader John Boehner, R-Ohio.

Heller said they will be introduced as legislation next week.

"I am talking to people in my district that have lost 50 to 70 percent of their net worth," Heller said. "We are trying to give them as many angles as possible" to recover their investments and retirement savings.

Among other provisions, the bill would suspend for three years, until 2012, the requirement that a portion of savings be withdrawn from retirement accounts at age 701/2.

Rep. John Kline, R-Minn., said that would avoid forcing people to cash out some of their nest egg at a time when the stock market is down.

Also, the bill would double the amount that working senior citizens could earn without losing Social Security benefits.

Current law reduces benefits for seniors who earn income greater than $14,160.

To cushion the blow from stock market losses, the measure would suspend capital gains taxes on newly acquired assets for the next two years.

It also would suspend taxes on dividend income through 2011.

"Americans' concerns about their savings even trumps concerns about whether they will keep their jobs," Boehner said.

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@ stephensmedia.com or 202-783-1760.