Life insurers say they will oppose the Bush administration’s efforts to use the 2007 federal budget to create a new system of tax-free saving and investment accounts.
The budget proposal, released today, repeats earlier calls by the Bush administration to create lifetime savings accounts, retirement savings accounts and employee retirement savings accounts. The LSAs, RSAs and ERSAs would replace the many saving and investment vehicles that now qualify for special tax breaks.
Creating the accounts would discourage long-term savings and pension plan maintenance and creation, according to the American Council of Life Insurers, Washington.
The account proposals “do not represent wise ways to address our nation’s retirement security crisis,” ACLI President Frank Keating says in a statement. “As the review of retirement security issues commences in Congress this year, ACLI will advocate for policies that encourage people to save as much as possible in their employer-provided plans and encourage people to lock into a lifetime stream of income that only an annuity can provide.”
But the ACLI says it will support 2007 budget initiatives that would make permanent those parts of the tax code that temporarily increased the amounts workers can save in tax-qualified retirement savings plans.
Another major section of the budget would create new tax breaks for users of health savings accounts. One provision would let employers contribute more to HSAs for employees and dependents with chronic health problems than for other employees, and another provision would let consumers use HSA funds to pay for high-deductible, non-group health coverage.