A Democratic lawmaker is trying to make it more appealing for U.S. residents to use income annuities to fund life-long retirement income streams.
Rep. Earl Pomeroy, D-N.D., has introduced H.R. 4150, a bill that would exclude a portion of income from eligible annuities from taxable income.
The exclusion would apply to annuities used in individual retirement accounts and defined contribution retirement plans, and it also could apply to non-qualified annuities.
In addition, the bill would exclude amounts to buy coverage from the required distributions, according to the bill text.
The bill also would clarify the rules governing the taxation of partial annuity payments.
The bill would exclude from gross federal income taxes 25% of qualified annuity payments, up to $5,000 per year, and 50% of non-qualified annuity payments, up to $5,000 per year.
The qualified and non-qualified tax exclusions would double for joint tax filers.
The American Council of Life Insurers, Washington, has issued a statement welcoming the introduction of the bill, saying enacting it “would go a long way” toward addressing Americans’ retirement security concerns.