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Retirement Savings Accounts: A Summary of the Bush Administration's Proposal

Congressional Research Service, Library of Congress

President Bush's proposed federal budget for fiscal year 2004 would establish lifetime savings accounts (LSAs) and retirement savings accounts (RSAs). Individuals could deposit up to $7,500 annually in an LSA, regardless of their wage or salary income. Contributions would not be tax deductible, but investment earnings would accrue tax free. Money could be withdrawn from an LSA at any time and used for any purpose. Individuals also could contribute up to $7,500 from earned income to an RSA. Contributions to an RSA also would be after tax, but qualified distributions (after age 58, disability or death) would be tax free. Beginning in 2004, several kinds of employersponsored retirement plans would be consolidated into employer retirement savings accounts (ERSAs). Qualification rules in the tax code would be simplified, whereas other rules governing ERSAs would conform substantially to those that apply to 401(k) plans. This article describes the proposed plans in detail.

Key Words: retirement plans • savings plans • income tax • retirement savings accounts • 401(k) plans

Compensation & Benefits Review, Vol. 35, No. 3, 62-67 (2003)
DOI: 10.1177/0886368703035003008


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