Retirement Savings Accounts Reintroduced in the House

Washington, DC, July 1, 2004 – Rep. Sam Johnson (R-TX) has introduced legislation to simplify retirement planning options by streamlining IRA accounts into one Retirement Savings Account - open to anyone of any age and any income level.

The Retirement Savings Account Act, H.R.4714, would consolidate the three types of IRAs (traditional, nondeductible, and Roth IRAs) into a single account – a Retirement Savings Account (RSA). After-tax annual contributions of up to $5,000 per person would be permitted with no income caps. Earnings on these retirement accounts grow tax-free and distributions after age 58 would be tax free. The $5,000 contribution limit would be indexed for inflation.

RSAs were first introduced in January 2003, in the Bush Administration’s FY 2004 budget proposal, which also called for the creation of Lifetime Savings Accounts (LSAs) and Employer Retirement Savings Accounts (ERSAs). RSAs, LSAs, and ERSAs were also included in the President’s FY 2005 budget proposal.

RSAs would be available for only retirement savings; all withdrawals prior to age 58 (except death and disability) would be subject to a 10 percent penalty. Early withdrawals that currently are permitted from IRAs for home purchase, education, health care costs, or periods of unemployment would possible only through savings in Lifetime Savings Accounts (LSAs, H.R. 4078).

ICI Position
The Institute strongly supports efforts to simplify retirement planning and investing options and, earlier this year, hailed the Bush Administration’s proposal as a milestone advancement that would put long-term savings and investment opportunities within the reach of every working American.

Related Links
A section of this website is devoted to the Institute’s support for to encourage retirement savings through employer-sponsored plans and IRAs, simplify the rules governing retirement savings vehicles, and provide individuals with the education and professional advice they see to better understand and manage their retirement assets.