Lifetime Savings Account Web Site

www.LifetimeSavingsAccount.com


Purpose

The purpose of this site is to provide technical and planning information on the Lifetime Savings Accounts (or "Save for Family" accounts) to practitioners and consumers.  For information on the Roth IRA, please see our sister site, the Roth IRA Web Site.


Notable Quotes

"Middle-class taxpayers with modest savings will be able to put all their savings in their LSAs...In effect, these accounts would repeal the tax on investment earnings for taxpayers other than those who have a great deal of wealth."
Quote by Kaye Thomas (Fairmark Press, 1/31/03).

The Post also worries that the lifetime savings account "could be raided at will, leaving [workers] without a cushion later." It's true. A family would have to decide whether to "raid" a savings account to pay for the children's college tuition, or to leave it in there for retirement and health-care needs. This is called freedom.
Quote by NR Editors (National Review, 2/6/03).

News

The Bush administration has proposed sweeping changes to IRA tax policy that would greatly expand Roth IRAs (to be renamed Retirement Savings Accounts) and introduce a new Lifetime Savings Account with features similar to (and superior to) Roth IRAs.  Both accounts would offer tax-free withdrawals with contribution limits of $5,000 each with contributions to both allowed for a total of $10,000 per person.  However, Lifetime Savings Accounts would have fewer restrictions both for contributions and withdrawals.  For detailed information, see links below to the Treasury Dept. Press Release and the Treasury Dept.'s blue book (released on 2/7/05) which covers proposed pension and tax changes. 

See the following article found exclusively on the Lifetime Savings Account Web Site:
Why the Arguments Against Lifetime Savings Accounts are Wrong.

News Update:

LSAs were included in the President's Fiscal Year 2007 Budget.  However, there appears to be little likelihood of Congressional action in 2006.  (2/6/06).

On 11/1/05, The President's Advisory Panel on Federal Tax Reform released a report that included what might be called a modified Lifetime Savings Account that is being referred to as a "Save for Family" account.  It would have a contribution limit of $10,000, but would include restrictions on withdrawals.  (Presumably, withdrawal restrictions would not apply to contribution principal amounts, but would apply only to earnings on such contributions.  However, a definitive answer to that question must await the release of further details.)  No legislative action is possible before 2006 with the earliest possible effective date being 2007 if enacted in 2006.  New "Save at Work" accounts would replace 401(k) plans and other work-related plans while "Save for Retirement" accounts would replace IRAs and Roth IRAs. 
Comments by the Editor of LifetimeSavingsAccount.com:  It seems that significant changes to the "Save for Family" account proposal would likely be made before any such plan was enacted.  For example, the proposed nondeductible "Save for Family" account would also replace the deductible Health Savings Account and would effectively kill HSAs.  Does the Bush Administration really want to kill off HSAs?  And it would not be surprising to see the proposed $10,000 contribution limit cut back to a lower number like $5,000.  (11/2/05).

LSAs were included in the President's Fiscal Year 2006 Budget.  The proposed LSAs would have a $5,000 contribution limit.  (2/7/05).

Excerpts from Testimony submitted to United States Senate Special Committee on Aging on The Future of Retirement in the United States by Jagadeesh Gokhale, Senior Fellow Cato Institute, January 22, 2004:
Because Roth IRA contributions are made from post-tax resources and withdrawals are not subject to tax, participating in such "front-loaded" plans does not result in the tax-interactions...for "back-loaded" plans. Hence, Roth IRA-type incentive plans provide a lifetime tax subsidy even at low earning levels. The new proposals to introduce Retirement Savings Accounts and Lifetime Savings Accounts are structured similar to Roth IRAs and, therefore, should work better as saving incentives compared to 401(k) plans and traditional IRAs. They may be also better than Roth IRAs because of their simpler regulations.


Articles

Article submissions or requests for links to articles should be sent to info@lifetimesavingsaccount.com.  Please indicate "Lifetime Savings Account article" in the subject line of your e-mail.

Articles:

Title Description (date posted)
New:
Vice President's Remarks at the 2006 Saver Summit
Cheney speech on the White House web site (3/2/06)
Quotes:
...the President is asking Congress to encourage the savings with three simplified tax-free savings accounts for all Americans.
...lifetime savings accounts, would, for the first time, let a person save money tax-free for any purpose -- including job training, college tuition, down payment on a house, a car, or retirement.
New:
Tax Overhaul Glance
Article by Associated Press (10/19/05)
Quote:
...
Save for Family, that lets individuals put $10,000 aside each year for medical, education and home-buying expenses. Individuals could withdraw no more than $1,000 a year for other needs.
Comment by the Editor of LifetimeSavingsAccount.com:
If this report is accurate, the withdrawal limitations would discourage many from contributing more than $1,000 a year.  One would hope that contributions of any amount could be withdrawn at any time without any negative consequences.  Will have to wait for more details on this plan...
Bush Panel to Push Major Tax System Overhaul Article by Rob Wells (Dow Jones Newswires, 10/18/05)
Quote:
New "save for family" accounts would replace health savings, medical savings and flexible spending accounts. These would have a $10,000 contribution limit with withdrawals limited for education, health expenses, purchase of a new home or retirement. Individuals could also withdraw $1,000 a year without penalty.
Lifetime Savings Accounts Offer Politically Possible Tax Reform Article by Brian Mitchell (Investor's Business Daily, 1/26/05)
Quotes:
Tax-free Lifetime Savings Accounts were in Bush's last two annual budgets. It's a safe bet they'll be in his next budget due Feb. 7.
"The LSA would be a huge revolution," said Chris Edwards, director of fiscal policy at the Cato Institute. "Most Americans would only put their money into LSAs if they were enacted, and wouldn't bother putting money anywhere else."
Life insurers fighting major Bush initiative Article by Michael Kranish (The Boston Globe, 1/20/05)
Quote:
Indeed, for all of the publicity about private accounts in Social Security, the Lifetime Savings Accounts could have an even bigger impact on the way people save money.
Bush Expected To Delay Major Tax Overhaul Article by Jonathan Weisman and Jeffrey H. Birnbaum (Washington Post, 12/28/04)
Quote:
Wholesale changes to the tax code that just weeks ago were identified as a Bush administration goal by the end of 2005 are being pushed back for at least another year.
Washington would create lifetime savings accounts and retirement savings accounts to replace the current array of tax-preferred savings accounts for retirement, education and health care.
Comment by the Editor of LifetimeSavingsAccount.com:
If this report is true, it means LSAs would likely not become effective until 2006 at the earliest.
Bush Tax Reform Agenda Begins to Take Shape Article by Steve Stanek (Budget & Tax News, The Heartland Institute, 12/1/04)
Quote:
The president is assembling a tax reform commission to study ideas, a process Norquist expects to take at least 18 months. As those discussions go on, various changes in the tax code are likely to occur, he said.
"While this is going on, we'll have the ability to abolish the death tax," Norquist said. "I think we'll see one tax cut each year for the next four years. Each cut moves us toward reform. I know we can get rid of the death tax and get LSAs [lifetime savings accounts] and RSAs [retirement savings accounts]."
LSAs, 'W' and Social Security
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Article by Harriet Johnson Brackey (The Miami Herald, 11/7/04)
Quotes:
Bush proposed Lifetime Savings Accounts two years ago. If he puts it on the table again, it would probably sail through the Republican-controlled House and the newly elected Republican majority in the Senate.
''It's great if you have the money to save,'' said Ed Slott, a Rockville Centre, N.Y. CPA, who produces an IRA newsletter and IRAhelp.com. ``I would. I would take money out of my taxable accounts for me and my wife and two kids and put it into these. It'd be like a tax-free checking account.''
Fact Sheet: America's Ownership Society: Expanding Opportunities White House Office of the Press Secretary (8/9/04)
Quote:
New Savings Opportunities: The President has proposed to expand savings opportunities through the creation of Retirement Savings Accounts (RSAs) and Lifetime Savings Accounts (LSAs). RSAs would provide all Americans with an easy, tax-preferred way to prepare for retirement. LSAs would give all Americans the opportunity to save tax free to pay for job training, college tuition, the down-payment on a first home, a car to drive to work, or their retirement.
Federal proposals designed to promote saving, investing Article by Jack Sirard (Sacramento Bee, 5/2/04)
Quotes:
...the LSA has an equal, if not better, chance than the retirement savings account of coming to fruition.
Right now, it's problematic whether the overall proposal - or any part of it - will pass this year, largely because we're not hearing a large public outcry demanding these changes.
But that could change dramatically this summer when these issues are brought to the front burner.
Senate Bill 2263: Lifetime Savings Accounts Senate Bill 2263: Lifetime Savings Accounts (3/31/04)
Proposed Statutory Language
Remarks by Deputy Secretary Bodman at introduction of the President's Lifetime Savings Account Proposal Dept. of the Treasury Press Release, 3/31/04
Quote:
Importantly, LSAs will enhance savings opportunities for millions of low and moderate-income individuals.
Budget, Deficit, Threatens Economic Freedom Article by Norbert Michel (FOXNews, 3/2/04)
Quotes:
For the second consecutive year, politicized fears over the budget deficit will relegate a perfectly sound economic idea — taxing savings only once — to the budgetary abyss...
LSAs would ensure that peoples' savings are taxed only once. The funds could be withdrawn at any time, for any purpose, with no penalty. Not surprisingly, the left has branded these accounts as "welfare for the rich." But this argument completely misses the point.
The Forgotten Savings Plans Article by Norbert Michel (The Heritage Foundation, 2/8/04)
Quote:
The idea behind creating these accounts is sound. Providing individuals with better incentives to build their own wealth is exactly why the free market has proven superior to "planned" economies. It is precisely because LSAs, as well as the simplifying RSA and ERSA plans, would provide good incentives for individuals that they should be put before Congress.
Don't Miss This One:
A Primer on Bush's New Savings Accounts
Article by Gail Buckner (FOXNews, 2/7/04)
Quotes:
The idea behind the LSA, he says, to give people the "freedom and flexibility" to tap their savings for major life expenses such as the purchase of a home, a child's or their own education, or some other expensive purchase.
Says Congressman Ryan, "LSAs are a tool for lower-income workers to set aside savings with the comfort of knowing that if they need the money they can get to it. This will help everyone become a member of the savings and investor class."
FPA Supports White House Plan for New Savings Accounts Article by WebCPA staff on Financial Planning Association, 2/4/04:
Quote:
"The FPA supports tax changes that will help Americans more easily reach their retirement savings goals," said Gordon Bernhardt, CFP, CPA, chairman of FPA's Tax Subcommittee. "We especially like the president's proposals because of their simplicity and universality."
Don't Miss This One:
Administration Announces Revised Savings Proposals — Changes Made to Address ASPA’s Concerns
American Society of Pension Actuaries Summary of Proposed Changes and Analysis, 2/2/04:
Quotes:
...
In fact, ASPA believes that on balance the combined revised LSA/RSA/ERSA proposals, if enacted, would result in greater retirement plan coverage and consequently greater retirement savings for working Americans...
Concerns have also been raised that the LSA proposal, which allows distributions without restriction, will displace participation in employer-based retirement plans by lower income workers. In other words, if the LSA is enacted, lower income workers are going to save in the LSA in lieu of saving in an employer-sponsored ERSA. The evidence suggests, in ASPA’s view however, that such concerns are not warranted.
ASPA Applauds Changes to Bush Administration Savings Initiatives; Revised Proposals Will Now Promote Small Business Retirement Plan Coverage ASPA Press Release (Business Wire, 2/2/04)
Quote:
The American Society of Pension Actuaries (ASPA) announces it will now support the Bush Administration's revised savings proposals since they will result in greater retirement plan coverage and consequently greater retirement savings for working Americans.
Budget Briefing by OMB Director
 
Budget Briefing by OMB Director Bolten, 2/2/04:
Quote:
Q On the retirement savings accounts, the lifetime savings accounts, and so forth, how hard is the administration going to push that? It wasn't mentioned in the State of the Union, as I recall, at least not specifically. And what kind of support do you have lined up on the Hill to move this?

DIRECTOR BOLTEN: The question is about LSAs and RSAs, lifetime savings account, retirement savings accounts, which were carried in last year's budget. They are being repeated in this year's budget. I think the President actually alluded to it in the State of the Union. I know it's always a disappointment when things aren't mentioned in the State of the Union, whatever your favorite project might be, but particularly for this President, the State of the Union addresses have tended to be more thematic, rather than list-oriented. So no one should draw any negative inference if your favorite project was -- or favorite subject matter was not mentioned in the State of the Union.

It does remain a priority for the administration, the enactment of the LSAs and RSAs. I know Secretary Snow has that, along with the tax cuts, making sure the tax cuts are sustained, at the top of his priority list for this session of Congress. And there is support, I know -- and some bipartisan support, as well. I know Congressmen Portman and Cardin, who have been leaders in this area in the past, remain interested in the proposals that the administration is putting out. I don't know if they're entirely on board exactly where we are, but I think there is a good prospect to move some serious legislation in this session.

Don't Miss This One:
The President's Savings Proposals: Tax-Free Savings and Retirement Security Opportunities for all Americans
Press Release from Treas. Dept.'s Office of Public Affairs (2/2/04):
Quote:
LIFETIME SAVINGS ACCOUNTS (LSA)
 $5,000 annual contribution limit (indexed for inflation).
 Available to all individuals – no income limits, no age limits.
 Contributions would be nondeductible (like Roth IRAs).
 Earnings would accumulate tax-free and all distributions would be excluded from gross income.
 No minimum required distribution rules would apply at any age throughout owner’s life.
 Contribution limit of $5,000 applies to the individual owner of the account, not the contributor.
o Contributors could make annual contributions to the accounts of other individuals.
o Annual aggregate contributions to an individual’s accounts could not exceed $5,000.
Consolidation to LSAs
:
 Individuals could convert balances from Coverdell Education Savings Accounts (ESAs) or Qualified Tuition Plans (QTPs) to LSAs.
 Individuals could continue to contribute to ESAs and QTPs as under current law.
 Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs) would be retained.
Federal budget seeks permanent tax cuts Associated Press, 2/2/04:
Quote:
"We'd like to see as many advertisements for lifetime savings accounts as we do for lipstick and light beer," said Assistant Treasury Secretary Pamela Olson.
Bush to Back Off Some Initiatives for Budget Plan
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Article by Robert Pear and Edmund L. Andrews (The New York Times, 2/1/04)
Quote:
Administration officials said Mr. Bush...would not push for a big expansion of retirement savings accounts...
Bush retirement-savings plans will resurface in February budget Article by Greg Robb (CBS MarketWatch, 1/25/04)
Quote:
Under the latest version of the lifetime savings plan, a married couple would be allowed to put $10,000 after-tax money into a savings account, according to American Council of Life Insurers President Frank Keating. They wouldn't be taxed on gains generated by the investments and the money could be used without restrictions.
Bush Promotes Earlier Proposals for Tax-Advantaged Savings
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Article by Edmund L. Andrews (The New York Times, 1/21/04)
Quote:
Last year, Congressional Republicans persuaded the White House to back away from the proposals, largely because they were trying to push Mr. Bush's big tax-cutting plan at the time.
This year, administration officials are fine-tuning the ideas and shifting the emphasis from the extremely liberal "lifetime" accounts to the more restrictive "retirement" accounts that could be used only once a person reached retirement age.
Privatizing Social Security Still on Bush Agenda
 
Article by James Toedtman (Newsday, 1/20/04)
Quote:
Bush revived plans for two new tax-free savings devices in his State of the Union speech Tuesday night -- Retirement Savings Accounts (RSAs) and Lifetime Savings Accounts (LSAs).
Comment by the Editor of LifetimeSavingsAccount.com:
Although President Bush did not mention LSAs or RSAs directly, some pundits are suggesting his speech revived the ideas. They are likely depending on comments by administration officials that the tax-free savings accounts will be in the 2005 budget.
Bush preparing for Tuesday's State of Union speech Article by Steve Holland (Reuters, 1/16/04)
Quote:
In a relatively modest initiative, Bush will propose new ways to help Americans save money. His proposals include lifetime savings accounts -- for any savings purpose such as a house or college tuition -- and retirement savings accounts.
Sources said the retirement savings accounts could allow contributions of $5,000 to $7,500 per year.
Tax Policy Moderates Seem to Have Gained Upper Hand
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Article by Peter G. Gosselin (Los Angeles Times, 1/16/04)
Quote:
The official said the administration would include one of the tax breaks conservatives have been promoting — for retirement savings — in its fiscal 2005 budget plan, due out in two weeks. But he made no mention of two others — for so-called lifetime savings accounts and for a new employer-based retirement savings account.
Democratic Leader Qualifies Support for Savings Plans News Headline at CCH Site, 1/15/04
Quote:
House Democrats support the concept of tax-free savings accounts if they do not raise the deficit or mostly benefit wealthy taxpayers, said House Minority Leader Nancy Pelosi, D-Calif., at a January 14 press conference in Washington, D.C. She hinted at a Democratic proposal but would not state when or if it would be released.
Don't Miss This One:
Will Savings Plan Be Fourth Bush Tax Cut?
Article by David Freddoso (Human Events, 1/13/04)
Quotes:
Bill Ahern, spokesman for the non-partisan Tax Foundation, described the new after-tax savings plans as "Roths on steroids," which are "bigger and more generous" than the tax-advantaged retirement accounts available under today’s tax code.
...Once the new retirement accounts are established, said Norquist, the Social Security reform proposal would appeal to many workers by letting them put a portion of their Social Security taxes into the accounts instead of simply handing them over to the government. 
"Social Security reform becomes a tool to excite people," he told Human Events. "It gives them more money to put in their RSA."
Treasury Renews Campaign for Tax-Free Savings Accounts Article by Jonathan Weisman (Washington Post, 12/6/03)
Quote:
...the Treasury Department will probably trim the annual contribution limits on the proposed Lifetime Savings Accounts and Retirement Savings Accounts to $5,000 per person...
Don't Miss This One:
Lifetime & Retirement Savings Accounts Ending the Double Tax on Savings

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Tax Policy Research by Daniel Clifton & Eric Wong, American Shareholders Association (Americanshareholders.com, 12/3/03)
Quotes:
Simplified tax-free savings accounts will encourage more participation & new tax savings.
The purpose of saving for current and near future expenses is much different than saving for retirement, especially for younger workers and lower income individuals.
...the empirical evidence suggests that LSAs and RSAs will lead to a significant increase in new savings and savings will increase for all Americans.
Don't Miss This One:
New Study: Administration's Savings Initiative Will Boost Savings and Investment
Press Release by American Shareholders Association (Americanshareholders.com, 12/3/03)
Quotes:
American Shareholders Association (ASA) today released a study documenting the benefits of the Department of Treasury's proposal to create Lifetime and Retirement Savings Accounts (LSA/RSA).
“The double tax on savings coupled with complex rules has led to a significant decline in America’s personal savings rate,” said ASA Executive Director Daniel Clifton, who co-authored the report. “Removing the discriminatory double tax on savings and simplifying the existing rules will increase the number of savers, enhance the personal savings of working families, and bolster the productive capacity of America’s economy.
Snow says new personal savings accounts could help millions Article by Jeannine Aversa (SFGate.com, 11/20/03)
Quote:
Millions of Americans could benefit from an overhaul of personal savings accounts that the Bush administration is considering as a key part of next year's tax proposals, Treasury Secretary John Snow said...
Deal of a lifetime
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Article by Jonathan Burton (CBS MarketWatch, 11/18/03)
Quotes:
LSA proponents see these accounts as a simplification of the alphabet soup of retirement-oriented programs and a clear incentive to save.
...optimistic that the president's tax-savings package will become law next year.
On Capitol Hill, Johnson praises LSAs as a "third leg" of retirement, a tax-free companion to Social Security and employer-sponsored 401(k) plans.
White House looks at tax code and 'lifetime savings' Article by Edmund L. Andrews (International Herald Tribune, 11/14/03)
Quotes:
...Treasury Secretary John Snow said on Thursday that his staff was preparing "a number of proposals to simplify the tax code" and resurrected the idea of "lifetime savings accounts" that would allow people to put aside large sums of money and pay no tax on the investment income they receive.
...he cautioned that President George W Bush had not yet decided to include the proposals in his budget plan for next year.
All in the (Tax-Reform) Family Article by John Hood, (National Review, 11/7/03)
Quotes:
...
the Bush administration and its allies in Congress are preparing a major push for new tax-free savings accounts as part of a coherent, free-market approach to reforming entitlements and the federal tax code.
...
a "lifetime savings account," would allow individuals to put up to $7,500 a year in after-tax dollars into an account and then make subsequent withdrawals for any purpose — emergencies, down payments on homes, tuition, or medical expenses — without paying either penalties or taxes.
Excerpts from a Monitor breakfast on tax cuts Article by David T. Cook, The Christian Science Monitor, 11/5/03
Quote:
Yes, there will be a tax cut every year Bush is president...The tax cut will be the retirement savings account, lifetime savings account that the Treasury Department put out last January...
Vice President Remark's on 2003 Thomas Jefferson Freedom Award The White House Press Release, 7/31/03:
Quote:
We want Americans to...own their own retirement. And in coming years, we'll continue to put into place programs that help Americans achieve all these goals -- from health insurance tax credits that make it affordable for people to purchase their own health insurance...to lifetime savings accounts that increase incentives for Americans to save in the long run....
Treasury Assistant Secretary for Tax Policy Pamela Olson Remarks to 2003 ICI/SIA Retirement Savings Conference Treasury Dept. Press Release, 6/2/03:
Quote:
The proposed simplification of the retirement savings accounts and the addition of a lifetime savings account accessible to all Americans would bring significant simplification benefits....Earnings would not be subject to income tax and amounts could be withdrawn at any time for any purpose. 
Expand Accounts For Retirement Article in The Intelligencer, 4/8/03
Quote:
The limits exist quite simply because Congress fears that someone, somewhere will save "too much,"...The limits reflect Washington's bipartisan, permanent view that all earnings belong first to Washington, and wage earners can keep what Washington doesn't have a pet cause on which to spend it.
Don't Miss This One:
Behind The New Savings Plans
Article by Joel Bruckenstein (Financial Advisor Magazine, April, 2003)
Quote:
Even if the proposals are not enacted in 2003, their instant popularity with the public—not to mention with the bear market-battered financial services industry—virtually guarantees they will resurface again.
Comment by the Editor of LifetimeSavingsAccount.com:
This is an excellent article with a planning perspective.
Don't Miss This One:
Savings Savvy
Article by Victor A. Canto (National Review, 3/12/03)
Quote:
Tax-free compounding has a powerful and significant impact on the effective tax rate faced by individuals...the personal income-tax rate will remain the same while the effective tax rate on savings will decline to zero.
Bush plan puts investors on hold Article by Eileen Ambrose (Baltimore Sun, 3/10/03)
Quote:
...
advising clients to remain flexible and not tie up dollars in long-term investments in case some version of the Bush plan passes and changes the way Americans save.
Savings proposal gets little attention
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Article by Pamela Yip (The Dallas Morning News, 3/3/03)
Quotes:
Administration officials vehemently denied that the savings and retirement accounts plan has fallen off their legislative priority list.
"We have not abandoned the Lifetime Savings Accounts and Retirement Savings Accounts proposals," said Tara Bradshaw, spokeswoman for the Treasury Department. "The jobs and growth package is our priority. It doesn't mean we're throwing everything else out."
Proposed accounts encourage saving Article by Terry Savage (Chicago Sun-Times, 2/26/03)
Quote:
...even people who could set aside only a small amount of savings each month into an LSA would benefit...If LSAs become a reality, you'll want to set aside all the money you can in one of these accounts.
Bush's plans for saving money may appear in fall, or never Article by David Hendricks (San Antonio Express-News, 2/27/03)
Quote:
The rationale for allowing people to take their money back before retirement without penalty escapes me.
Comment by the Editor of LifetimeSavingsAccount.com:
Here's a novel idea:  The rationale for allowing people penalty-free access to their money is that it's their money!
Quote:
But when a 25-year-old is offered a 401(k), even with a typical 50 percent employer match, but sees he can do a LSA on his own and can get access to his money at any time for any reason, the young worker will opt for the LSA.
Comment by the Editor of LifetimeSavingsAccount.com:
It is maddening how members of the liberal press always assume that everyone else is dumber than dumb. Anyone who can get a 50% match would be an idiot not to take advantage of putting their savings in a 401(k) rather than an LSA. And most people would figure that out.
Bush's Plan for Pensions Is Now Given Low Priority
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Article by Edmund L. Andrews (The New York Times, 2/26/03)
Quote:
In large part, the backpedaling reflects hostile reactions from Republicans who were not consulted in advance and were taken aback by the sweep of the Bush administration's proposals.
The Investors' Dream Act of 2003 Article by Susan Scherreik, with Lewis Braham (Business Week, 2/24/03)
Quote:
Congressional support for the President's tax proposals is weak, and no doubt they will change much between now and enactment. Still, even if the proposals are scaled back considerably, they will dramatically reshape how we save and invest.
For many people, investing would become practically a tax-free activity under the current proposal.
Some Facts About President Bush's Proposed Savings Accounts Article by Gail Buckner (FoxNews.com, 2/14/03)
Quote:
LSAs would be funded with after-tax money. In other words, you don't get to deduct your contribution. So why bother to make one? Well, just imagine never having to pay income tax on your mutual funds again.
Don't Miss This One:
Why the Arguments Against Lifetime Savings Accounts are Wrong
Article by Gregory Kolojeski (Lifetime Savings Account Web Site exclusive, 2/13/03)
Quote:
The Lifetime Savings Account is an idea that will be wildly popular with most people...The only chance for getting LSAs appears to be pressuring Congress to legislate them into existence. Right now, the odds appear to be heavily against Lifetime Savings Accounts being passed into law, but you never know.
Don't Miss This One:
Will LSAs help you? Bush's Lifetime Savings Accounts are still just a proposal, but interest is running high
Article by Walter Updegrave (CNN/Money, 2/10/03)
Quote:
Frankly, I welcome these changes. I think we can use all the help we can get saving for retirement, so the idea of being able to sock away significant amounts of money and let it build tax free is, to my mind, about as close as one can get to Nirvana (financially speaking, of course)...My advice: if you're really as gung ho about these accounts as you say you are, let your representatives inside the beltway know and, who knows, maybe they'll take your views into account when casting their votes.
Annuities: Should you bother? Article by Walter Updegrave (CNN/Money, 2/11/03)
Quote:
As long as the annuity remains within the tax-free LSA and/or RSA, the payments it generates are tax free. In short, the annuity becomes a way to convert your tax-free account into a tax-free retirement income that you can't outlive.
Taxing Income Once Article by Alan Reynolds, Washington Times, 2/9/03
Quote:
As a matter of fairness and economic efficiency, every dollar of everyone's savings should be treated either the way we treat traditional or Roth IRAs....Those are generous amounts for young couples, but not later in life.
What is marvelously unique is that this plan does not say that if you earn "too much" you cannot participate.
Retirement plan means $1 trillion shift
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Article by William E. Donoghue (CBS Market Watch, 2/10/03)
Quote:
Forget about 529 plans, 401(k)s and similar plans. The LSAs are better, more flexible choices for saving for pre-retirement goals.
Comment by the Editor of LifetimeSavingsAccount.com:
401(k)s are still better than LSAs if there is employer-matching and you have investment choices other than just stock funds.  I would also bet that taxable conversions to RSAs will be far less than the author suggests.  This is because the key variable is future rates of return and expected rates just don't seem promising.  Future and current tax rates are also important factors in evaluating conversions.
Lincoln: Bush plan won't hurt annuities Article by Lincoln National Corp. expects to benefit from the Bush administration's proposal to overhaul savings plans, despite competition it could provide for annuities.
Don't Miss This One:
GOP Not Backing Savings Changes
Article by Jim VandeHei (Washington Post, 2/7/03)
Quote:
A key element of President Bush's ambitious tax-cutting agenda -- his proposal to create new tax-free savings accounts -- has virtually no chance of passing...
Comment by the Editor of LifetimeSavingsAccount.com:
It appears that Portman and the House Republicans may have caved to the class warfare types.  Lifetime Savings Accounts would likely have been wildly popular with most Americans, but House GOP leaders don't seem to care.
Bush Retirement Savings Plan Draws Fire Article by Christine Hall (Crosswalk.com, 2/6/03)
Quote:
But Heritage Foundation scholar David John believes that what's lost in future tax revenue will be more than made up for by investment-spurred economic growth.
Rethinking retirement savings Article by Martin Wolk (MSNBC, 2/5/03)
Quote:
At the heart of the Bush plan are proposed new Lifetime Savings Accounts that would allow individuals of any age or income to set aside up to $7,500 a year in after-tax income. Earnings — such as interest payments or capital gains — would accumulate tax-free and could be withdrawn at any time for any reason.
Don't Miss This One:
The Bush Revolution
Article by NR Editors (National Review, 2/6/03)
Quote:
The Post also worries that the lifetime savings account "could be raided at will, leaving [workers] without a cushion later." It's true. A family would have to decide whether to "raid" a savings account to pay for the children's college tuition, or to leave it in there for retirement and health-care needs. This is called freedom.
Don't Miss This One:
Savings system overhaul overdue
Article by Chet Currier (Detroit News, 2/5/03)
Quote:
The idea of creating LSAs (Lifetime Savings Accounts), RSAs (Retirement Savings Accounts) and ERSAs (Employer Retirement Savings Accounts) represents a long-overdue move to organize a basic element of the economy into something its users -- ordinary savers and investors -- can understand.
Bush savings plan holds tax-benefit implications for all Article by Susan Tompor (Detroit Free Press, 2/4/03)
Quote:
This plan would allow anyone -- no matter what age or income -- to save up to $7,500 a year in a tax-friendly account. For married couples, that jumps to $15,000.
Bush Budget Would Shrink Federal Revenue Article by Albert B. Crenshaw (Washington Post, 2/4/03)
Quote:
...
a certain kind of education savings arrangement called a Section 529 savings plan appears to offer a temporary way around the $7,500 annual limit.
Plan meets people's needs Article by Matthew P. Fink (USA Today, 2/4/03)
Quote:
The administration's plan is a milestone. If Congress enacts it, long-term savings and investment opportunities truly will be within the reach of every working American.
MoneyLine by Neil Downing: A primer on keeping up with Bush's savings plans
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Article by Neil Downing (The Providence Journal, 2/4/03)
Quote:
Lifetime Savings Accounts: You'd be able to contribute up to $7,500 a year (more in later years), regardless of your age or income. Your earnings wouldn't be taxed each year (as they are now, in an ordinary bank account, for instance). And you could make withdrawals at any time -- free of federal income tax -- for anything.
Get the gold watch, forget 401(k) Article by Gail MarksJarvis (Pioneer Press, 2/4/03)
Quote:
$7,500 each year — can be put into a tax-free Lifetime Savings Account that can be used for anything: college, a house, a vacation, or whatever your heart desires.
Don't Miss This One:
Lifetime Savings Accounts
Article by Kaye Thomas (Fairmark Press, 1/31/03)
Quote:
Middle-class taxpayers with modest savings will be able to put all their savings in their LSAs. The $7,500 annual contribution limit will not be a meaningful restriction for them. By contrast, a millionaire would be able to contribute less than 1% of her wealth each year. In effect, these accounts would repeal the tax on investment earnings for taxpayers other than those who have a great deal of wealth.
Bush's retirement plan overhaul Article by Leslie Haggin Geary (CNN/Money, 2/3/03)
Quote:
...
funds could be taken out at any time and for any purpose. That makes them a potentially powerful savings incentive for those hoping to amass money for a variety of shorter-term goals, not just retirement.
Bye-Bye, IRAs Article by Robert Brokamp (The Motley Fool, 2/3/03)
Quote:
A savings account offering tax-free growth, which can be used for anything by anyone, sounds good to us. And simplified retirement accounts aren't bad either. Keep in mind that this is just a proposal...
Bush tax plan a boon to savers Article by Kathleen Pender (San Francisco Chronicle, 2/1/03)
Quote:
The difference is, people could take the money out out of the lifetime account whenever and for whatever they want.
Bush to Propose Expansion of I.R.A.-Like Investments
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Article by Joseph B. Treaster & Mary Williams Walsh (The New York Times, 1/31/03)
Quote:
The plan is expected to eliminate the extra penalties for withdrawing money prematurely from existing I.R.A.'s, encouraging individuals to convert the proceeds to tax-free accounts.

Law & IRS

Title Description (date posted)
New:
2005:

Treasury Dept. Blue Book
Note: Click on this link to download a 1544K file named bluebk05.pdf from the Treasury's site.
The Treasury Dept. released its February 2005 blue book which details the proposed tax and pension changes in the administration's fiscal 2006 budget.
2004:
Treasury Dept. Blue Book

Note: Click on this link to download a 1610K file named bluebk04.pdf from the Treasury's site.
The Treasury Dept. released its February 2004 blue book which details the proposed tax and pension changes in the administration's fiscal 2005 budget.
2004:
Don't Miss This One:

The President's Savings Proposals: Tax-Free Savings and Retirement Security Opportunities for all Americans
Treasury Department Press Release dated 2/2/04 on Lifetime Savings Accounts and much more!
2003:
Treasury Dept. Blue Book
Note: Click on this link to download a 1396K file named bluebk03.pdf from the Treasury's site.
The Treasury Dept. released its February 2003 blue book which details the proposed tax and pension changes in the administration's fiscal 2004 budget.
2003:
President’s Budget Proposes Bold Tax-Free Savings and Retirement Security Opportunities for All Americans
Treasury Department Press Release dated 1/31/03 on Lifetime Savings Accounts and much more!

Other Resources

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