RE: persfin-digest V5 #11

From: "Knight, Philip" <PKnight@imps0014.us.dg.com>
Subject: RE: persfin-digest V5 #11
Date: Mon, 11 May 1998 08:26:59 -0400

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> -----Original Message-----
> In "Pensions for small-biz workers get boost", in the May 8-14, 1998
> _Denver Business Journal_, Sougata Mukherjee writes that Reps. Rob
> Portman, R-Ohio and Ben Cardin, D-MD introduced a bill on May 6th
> that would, among other things:
> 
> 1. Raise the contribution cap on a SIMPLE IRA from $6,000 to $10,000.
> 
> 2. Raise the contribution cap on 401(k) plans from $10,000 to $15,000.
> 
> 3. Provide a "catch-up" feature for workers ages 50 and older,
> allowing
> them to contribute as much as $5,000 above the cap to their
> qualified plans.
> 
> 4. Mandate faster vesting of employee contributions to qualified
> plans,
> requiring full vesting after three years of service, or graduated
> vesting
> in 20% increments over the first 5 years of service.
> 
> 5. Raise the age at which minimum distributions must begin from 70.5
> to 75 years.
> 
> We'll see how this one flies.=A0 Time to contact your legislators and
> ask
> them to support the worker bees again.
> 
	[Knight, Philip]  
	This all sounds fine except for #4.  What business does the
government have
	telling private companies at what rate to "vest" employees?
Employer-contributed
	amounts are completely at the discretion of a company.  They
don't *have*
	to provide *any* "matching."  The purpose behind vesting is to
reward employees who
	stick with the company.  (It's analagous, in some ways, to
providing stock options.)
	If we take away (or diminish) employers' flexibility here, we
may find that many of them
	will decide not to do matching at all. For the government to
come in and mandate
	something like this is way over the line IMHO.

	BTW, I'm a "worker bee."



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