Retirement Security Needs Lifetime Pay Act Would Help Solve Nation's Retirement Income Crisis
Legislation introduced by Reps. Earl Pomeroy (D-ND) and Ginny Brown-Waite (R-FL) would help solve the nation’s looming retirement income crisis and provide senior citizens with the peace-of-mind that their hard-earned savings will last a lifetime, said Frank Keating, president and CEO of the American Council of Life Insurers (ACLI).
The legislation—called the Retirement Security Needs Lifetime Pay Act, H.R. 2748—would create tax incentives for retirees to purchase lifetime annuities, which provide retirees with guaranteed income they can never outlive. The legislation also provides incentives for the purchase of longevity insurance, which addresses income needs for people who live beyond age 85.
“Of all the issues facing the baby boom generation as it nears retirement, few are as important as assuring their lifetime financial security. With the decline in defined benefit plans, personal retirement savings are more important than ever. These savings must last a lifetime so that retirees will not suffer financial hardship in their most vulnerable years. Longevity insurance is thus a vital component of a well-balanced retirement security plan. The Lifetime Pay Act will help ease retirement worries for millions of Americans,” Keating said.
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H.R. 2784 would:
- Provide a 50 percent tax exclusion for a portion of lifetime income payments from non-qualified annuities up to $20,000;
- Provide a 25 percent tax exclusion for a portion of lifetime income payments received under a qualified retirement savings plan;
- Exclude amounts used to purchase longevity insurance from the calculation of required minimum distributions (RMD) from qualified plans and individual retirement accounts; and
- Clarify the tax treatment of partial annuity payments by stating that payments from partially-annuitized contracts receive the same tax treatment as other annuity payments by prorating the contract values.
“Solving the retirement income crisis facing America will take effort and leadership. H.R. 2784 will help take us in the right direction,” Keating said.