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WASHINGTON-In Saturday sessions, the House and Senate approved the conference report for the administration’s $1.3 trillion tax cut bill, pared down from the original $1.6 trillion. The House vote was 240 to 154, with 39 not voting, while the Senate approved the measure 58 to 33. Credit union-backed pension reform provisions remained intact, despite some talk that they may have to be taken out. It was “very much a see-saw,” CUNA Senior Vice President of Government Affairs John McKechnie said. Some argued that it should be removed because it may have been a good start for a second tax bill, he explained. That idea was crushed when Senator James Jeffords, formerly a Republican from Vermont, left the Grand Old Party to become an Independent caucusing with the Democrats, giving the Democrats a 50-49 majority. Jeffords’ switch becomes official when Congress returns from the Memorial Day Recess. Many Democrats were already weary about the first tax cut and with control of the Senate floor, a second tax cut would be highly unlikely. Still others felt the pension reform section should be stripped out to make room for falling interest rates, according to NAFCU lobbyists. The pension reform provisions expand eligible 401(k), 403(b), and 457 contributions to $15,000 from $10,500 over the ten-year plan and are indexed to inflation. The popular provisions also serve to increase Individual Retirement Account (IRA) eligible contributions from $2,000 to $5,000 over 10 years, also indexed to inflation and provides a catch up plan for workers over 50 years old. This last component was aimed at helping women re-entering the workforce after staying at home with young children. Additionally, the bill creates faster vesting schedules and eases retirement plan portability for the more mobile, modern workforce. On the eve of the bill’s passage, the credit union trade associations were lobbying hard to keep the pension reform provisions intact. NAFCU wrote a letter, which was distributed to all the conference members urging them to support the pension reform measures. “Our savings provisions would reverse the falling savings rate-a danger to our future prosperity-by encouraging access to and use of IRAs and 401(k)s,” the letter signed by NAFCU President and CEO Fred Becker read. CUNA was also vigilant in its communications with key conferees. The conferees to President George W. Bush’s tax package included Senators Chuck Grassley (R-Iowa), Orrin Hatch (R-Utah), Frank Murkowski (R-Ark.), Don Nickles (R-Okla.), Phil Gramm (R-Texas), Max Baucus (D-Mont.), John Rockefeller (D-W.V.), Tom Daschle (D-S.D.), and John Breaux (D-La.) and Congressmen Dick Armey (R-Texas), Bill Thomas (R-Calif.), and Charles Rangle (D-N.Y.). The extra retirement savings the pension reform should generate is expected to boost the inflow of deposits at the nation’s credit unions and other financial institutions. [email protected]

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