Legislation has been introduced in the House that provides for the exclusion from taxation of a portion of lifetime income payments received under IRAs, qualified retirement plans (other than defined benefit plans) and similar employer-sponsored retirement plans, as well as non-qualified annuities.

The legislation, the “Lifetime Pension Annuity for You Act,” H.R. 4150, also facilitates the purchase of longevity insurance by not including amounts needed to purchase coverage in required distributions. The bill also clarifies the taxation of partial annuity payments.

Specifically, the bill would exclude from gross federal income taxes 25% of qualified annuity payments, up to $5,000, and 50% of nonqualified annuity payments up to $5,000 per year.

The qualified and non-qualified tax exclusions would double for joint tax filers.

The bill was introduced last week by Rep. Earl Pomeroy, D-N.D., and enjoys the strong support of the insurance industry, including the American Council of Life Insurers.

In introducing the bill, Pomeroy said that while Baby Boomers hold $7.6 trillion in financial assets, “those assets too are concentrated among the wealthiest, and the bottom half of the boomers just own 3% of the generation’s wealth.”

He said the 78 million baby boomers are “anxious” about retirement as they see an increasing burden shift falling on them.

Specifically, he said the National Retirement Risk Index developed by the Center for Retirement Research shows that nearly 45% of households will be at risk of being unable to maintain their standard of living in retirement.

In a statement, ACLI said the legislation “would go a long way” toward addressing Americans’ retirement security concerns.

“Today Americans are more reliant on personal savings for their retirement security than ever before,” the ACLI said.

And with many retirements lasting 20 or 30 years or even longer, people are concerned they will outlive their savings, the ACLI said. “Indeed, according to a recent study by the Society of Actuaries, 45% of retirees express some concern that they might deplete all of their savings.”