The decision of the Bush administration to propose in its budget for the coming fiscal year a combination of retirement incentive savings plans that would include so-called Lifetime Savings Accounts is stirring concern within the insurance industry.
The industry also is concerned about another provision of President Bushs budget, one which would make permanent the repeal of the estate tax. Under current law, the estate tax is due to be eliminated entirely in 2010 but will reappear the following year.
Both the American Council of Life Insurers and the National Association of Insurance and Financial Advisors are against repeal and instead support estate tax “reform,” including creation of a threshold that is indexed for inflation and retention of the current “step up” in basis system.
But NAIFA and the ACLI do support certain retirement savings incentive provisions contained in the 2001 and 2003 tax cut laws enacted during the first Bush administration, officials say.
In general, however, the ACLI and NAIFA oppose creation of LSAs, with their concern being over the impact of LSAs on long-term family and retirement security as well as on the overall
long-term U.S. savings rate.
Their concern is greater this year because the new budget proposes combining all individual retirement savings accounts, replacing the various forms of IRAs with so-called Retirement Savings Accounts, or RSAs.