Women’s Retirement Security Act of 2007 Reintroduced in Senate

Some Provisions Would Enhance 457 Plan Requirements, Aid All Savers

May 3, 2007

The Women's Retirement Security Act of 2007, a bill aimed at boosting ways women can save for retirement, recently got a second chance at passage. Senators Gordon Smith (R-OR), Kent Conrad (D-ND) and John Kerry (D-MA) re-introduced the bill on May 3, 2007. It was originally introduced in the fall of 2006. Legislators have said that the bill aims to help women better prepare for retirement through financial literacy education, provide more assistance with getting equitable imbursements during divorce, and introduce additional retirement savings incentives.

For example, the bill includes a provision that would permit employees to transfer up to $500 per year in unused health flexible spending accounts (FSAs) to a defined contribution plan -- like a 457 retirement plan or individual retirement account.

Another provision expands the Saver’s Credit, a tax credit for qualified low and moderate income workers who contribute to individual retirement accounts (IRAs) and workplace retirement plans, to allow workers to claim a larger credit even if they do not have an additional tax liability. The new law would also require that the credit be deposited into a qualified retirement savings account.

The bill would also loosen rules excluding part-time workers from employer-sponsored defined contribution savings plans so that those working fewer than 1,000 hours per year would still qualify for inclusion in these plans. The change would benefit women especially whose family responsibilities often take them out of the fulltime workforce for long periods of time. But all part-time workers would benefit.

IRA rules would be revised to count as income disability income, unemployment compensation and other “wage replacement” income. Income from two previous years could also be used in calculating the annual ROTH IRA contribution limit.

The bill also includes provisions to have the Labor and Treasury Department study the feasibility of extending spousal consent requirements to defined contribution plans as a way to protect women in divorce who often are left out of the proceeds from these plans. The bill would also encourage women to purchase longevity insurance that would provide benefits at the end of an annuity payee’s life expectancy.

While its name suggests it is limited to women, the bill offers advantages to men and women alike, and will not be exclusive to women.