Two members of Congress have introduced legislation strongly backed by the American Council of Life Insurers that would encourage workers to annuitize a portion of their retirement savings from a qualified plan.
The legislation, called the Secure Annuity Income for Life Act, would exclude from income 15% of the annual annuity stream to a retiree, subject to a limitation.
Specifically, the maximum amount of annuity income qualifying for the exclusion is $20,000, annually. Thus, the exclusion is capped at $3,000.
The legislation is sponsored by Reps. Earl Pomeroy, D-N.D., and Johnny Isakson, R-Ga.
The legislation did not have a bill number at press time.
ACLI President Frank Keating praises Pomeroy and Isakson for introducing the legislation and their understanding of the retirement security equation.
“They know retirement security is not built on accumulating assets alone, but managing them in retirement,” Keating says.
“By annuitizing at least a portion of assets from a qualified plan, a person can go a long way toward guaranteeing lifetime financial security,” he adds.
In health news, President Bush is pressuring Congress to create a new $400 billion Medicare prescription drug benefit by July 4.
“Time and time again, Medicares failure to pay for drugs means our seniors risk serious illnesses, disease and injuries, all of which Medicare would pay to treat after the fact,” he says.
The president spoke in Chicago to a meeting of the Illinois State Medical Society.
Bush notes there is a growing consensus in both the House and the Senate, and among both Republicans and Democrats, that seniors need more choices and better benefits, including prescription drugs.
“With the right spirit, I am confident that both the House and the Senate can act on historic Medicare improvements before the 4th of July recess,” Bush says.
Currently, the leading prescription drug proposal was developed by Senate Finance Committee Chairman Charles Grassley, R-Iowa, and Ranking Democrat Max Baucus.
The legislation was set to be approved by the Committee after press time for this issue.
Under their proposal, beginning in 2006, all Medicare beneficiaries would have the option of purchasing a standard drug benefit or an actuarially equivalent coverage.
The standard coverage is defined as having a $275 deductible. Between $276 and $3,450 in costs, Medicare would pay 50% of all costs.
There would be no coverage between $3,450 and $3,700 in total drug expenditures.