WASHINGTON, D.C.—Today, U.S. Representative Rahm Emanuel introduced the “Retirement Savings for Working Americans Act of 2005,” legislation that makes the Saver’s Credit refundable and permanent. The Saver’s Credit gives working Americans a tax credit for contributing to a 401(k), other employer plan, or Individual Retirement Accounts (IRA).

           “The Saver’s Credit ensures that the tax code helps middle-class families build their retirement savings as it does today for the very well-to-do,” said Emanuel.

           In 2001, the original Saver’s Credit suffered severe legislative cutbacks when it was incorporated into President Bush’s first tax cut legislation.  The 2001 EGTRRA legislation made the original Saver’s Credit nonrefundable, it reduced eligibility for the fifty percent credit rate, and it included a sunset provision that gave the credit a 2006 expiration.

            “The Retirement Savings for Working Americans Act of 2005 will help level the playing field for retirement savings incentives by giving middle class Americans a tax credit for contributing to their private savings. Without this credit, millions of families who are not in the higher tax brackets will get little or no tax benefit if they contribute to a retirement savings plan,” said Emanuel. “Now, they have an incentive.”

            The Saver’s Credit is the first and only major federal legislation directly created to promote tax-qualified retirement saving for moderate income workers.

            In addition to making it permanent, Emanuel’s Retirement Savings for Working Americans Act of 2005, expands the Saver’s Credit to:

• Make it fully refundable and available to more than 50 million moderate income households.
  
• Expand eligibility to millions of additional middle-income working families by making the 50% credit available to married couples with income up to $60,000 and singles with income up to $30,000.

The fifty percent credit would be available to:

• Joint filers with joint income up to $60,000, phasing out ratably between $60,000 and $70,000;
  
• Single filers with income up to $30,000, phasing out ratably between $30,000 and $35,000;
  
• Head of household filers with income up to $45,000, phasing out ratably between $45,000 and $52,500.

          The Retirement Savings for Working Americans Act of 2005 is the second piece of legislation Emanuel has introduced this year to encourage individuals to save. Last week, Emanuel introduced the Direct Deposit Savings Act of 2005, legislation that makes retirement savings easier by allowing taxpayers to deposit some or all of their Federal income tax refund directly into personal savings or Individual Retirement Accounts.