(FORTUNE Magazine) – Congress is about to declare success a virtue again, and not in its typically windy way. With remarkably little fanfare, lawmakers are headed toward repealing a law that for good reason has been dubbed the "success tax," a 15% tax imposed on "excess" withdrawals from individual retirement accounts and 401(k)s.

As it now stands, the law penalizes people for doing too well--for earning and saving too much money. Anyone who withdraws more than $160,000 a year from a tax-preferred retirement account stands to get whacked with the 15% levy. The same tax is also applied to the estates of people who die with more than roughly $1.2 million in these same accounts, also known as qualified pension plans. What this means is that many of the people who have believed in the infallibility of an IRA or a 401(k) have been worshipping a false idol. According to a study by tax experts John Shoven and David Wise, the 15% penalty can "turn the shelter into a trap" by diluting or even eliminating the tax advantages that most of us take for granted.

Congress became aware of the problem when it began to hear complaints from people who weren't wealthy. College teachers and small-business owners started calling in and writing letters when they noticed that the huge run-up in stock prices in recent years had transformed their modest savings into accumulations large enough to trigger the tax. That wasn't supposed to happen. The "excess distributions tax" was enacted in 1986 to prevent rich people from getting too much benefit from a tax preference designed to help the middle class. But big returns on investments, says Peter Merrill of Price Waterhouse, "have made anyone who saved even a modest amount over a long period subject to the tax, not just rich people." Shoven and Wise estimate that people earning as little as $30,000 a year at age 50 can face the tax--as long as they have invested often and wisely.

Which is why Senator Phil Gramm entered the fray. When the Senate Finance Committee began to draft its deficit-reduction bill in June, the Texas Republican insisted that the measure include repeal of the tax. (The House's version of the tax bill doesn't contain a similar success-tax-killing provision, but insiders expect the final bill to bow to the Senate.) Similar grousing led last year to a three-year suspension of the levy, but this year Gramm took the opportunity to erase the law entirely. "It is an insane national policy to penalize people who, in the mind of the government, save too much," Gramm says. Of course, the success tax isn't the only punishment for doing well that our leaders inflict. But soon personal financial success will be a little more acceptable in Washington.

--Jeffrey H. Birnbaum