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Congress Sends Tax-Cut Bill To White House

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Both the House and the Senate have approved a tax bill that will lift the current income cap on conversions of traditional individual retirement accounts into Roth IRAs.

Members of the House voted 244-185 Wednesday for the final version of the bill, H.R. 4297, the Tax Relief Extension Reconciliation Act, and members of the Senate today voted 54-44 in favor of the bill.

None of the bill provisions other than the Roth IRA provision appears to have a direct effect on life or health insurers.

Members of the Congress included the Roth IRA conversion provision, which permits consumers to pay income taxes on traditional IRA assets in exchange for a promise that the federal government will not tax the assets or returns on the assets in the future, because it may generate immediate tax revenue that will help offset popular tax cuts.

Some industry experts believe the Roth IRA conversion provision could hurt annuity sellers, by giving some high-income taxpayers who might have rolled traditional IRA assets into annuities a chance to roll the assets into Roth IRAs.