Act Includes Expanded Iras

In addition to boosting the federal minimum wage to $4.75 an hour in October and $5.15 in September of 1997, the measure known formally as the Small Business Job Protection Act also:

Permits small businesses to offer “savings incentive match plans” (SIMPLE) retirement savings plans that resemble individual retirement accounts. With a SIMPLE plan, a worker may make pretax contributions of as much as $6,000 a year to an account, where it can grow tax-deferred until retirement. The employer is required to match the worker’s contributions, up to 3 percent of pay, or to make a blanket 2 percent contribution for all eligible participants.

Allows non-working spouses to make a full $2,000 contribution to an IRA. Currently, couples with only one wage earner are limited to contributions totaling $2,250. The measure raises that cap to $4,000, though current rules for deductibility still apply.

Allows a $5,000-per-child tax credit for adoption expenses, and an exclusion from income of up to $5,000 for employer-provided adoption assistance. Benefits apply only to qualified adoption expenses, such as legal fees and court costs, and phase out when adjusted gross income tops $75,000, vanishing completely at $115,000.

Permits many tax-exempt organizations, such as charities, trade associations and labor unions, to offer 401(k) tax-deferred retirement savings plans to employees. Such groups had been restricted to less flexible 403(b) plans.

Clarifies the tax treatment of prepaid college tuition plans. Under the act, the programs themselves are tax-exempt, and benefits are not taxed until they exceed contributions.

Repeals temporarily the 15 percent “excess distributions” tax on people who receive more than $155,000 from pensions and 401(k) plans. This is an invitation to holders of big pension nest eggs to withdraw a portion during the window - which closes at the end of 1999 - but regular taxes still apply.

Reinstates the 10 percent excise tax on airline tickets for domestic flights and the $6 per person tax on international departures.

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This sidebar appeared with the story: WAGE HISTORY The federal hourly minimum wage since its inception: October 1938 25 cents October 1939 30 cents October 1945 40 cents January 1950 75 cents March 1956 $1.00 September 1961 $1.15 September 1963 $1.25 February 1967 $1.40 February 1968 $1.60 May 1974 $2.00 January 1975 $2.10 January 1976 $2.30 January 1978 $2.65 January 1979 $2.90 January 1980 $3.10 January 1981 $3.35 April 1990 $3.80 April 1991 $4.25

The wage increase signed into law Tuesday: October 1996 $4.75 September 1997 $5.15