ACLI Applauds Committee OK Of Bill Encouraging Annuitizing
The House Ways and Means Committees approval of legislation that would encourage individuals to annuitize part of their retirement savings could represent a turning point in retirement savings policy, says Frank Keating, president of the American Council of Life Insurers, Washington.
“The most important thing,” Keating told National Underwriter, “is the focus on shifting away from tax cuts for the sake of tax cuts to a policy of encouraging socially responsible behavior.”
Keating notes that the mortgage interest deduction has had a tremendous impact on encouraging home ownership and wealth accumulation.
Similarly, he says, the deduction for charitable giving encourages charitable activities.
Now, Keating notes, the baby boom generation is approaching retirement with very little retirement savings accumulation. He calls this a “demographic time bomb,” that is extremely worrisome.
That is why ACLI is so pleased, Keating says, that the Ways and Means Committee supports using the tax code to encourage private retirement savings.
The legislation, H.R. 1776, would allow individuals to exclude up to $2,000 of retirement income annually for up to five years if they take their retirement savings in the form of an annuity.
The provision applies to savings now in 401(k) plans and Individual Retirement Accounts.
“This tax incentive may appear modest to some, but it sets a precedent,” Keating says. “It would establish into tax law the social benefit of encouraging individuals to take a lifetime stream of income at retirement.”
During the consideration of H.R. 1776, a major controversy erupted between Ways and Means Committee Republicans and Democrats, during which Committee Chairman Bill Thomas, R-Calif., called the Capitol Hill police to evict Democrats from the Committees meeting room.
Thomas has since apologized for his actions.
Keating says he does not believe the controversy will affect the annuity provision ACLI supports.
He notes that the controversy erupted over an issue unrelated to the annuity provision, and there is always a certain amount of partisanship in Congress.
Keating says that since joining ACLI earlier this year, he has worked to move the association toward bipartisanship.
For example, he says, ACLIs top lobbyist, Kim Dorgan, is a strong Democrat.