Retirement groups hailed a House proposal Tuesday that would provide incentives for retirees to receive a portion of their retirement savings in the form of guaranteed lifetime income.
Reps. Earl Pomeroy, D-N.D., and Ginny Brown-Waite, R-Fla., have introduced H.R. 2748, the Retirement Security Needs for Life Act. Included in the bill is a provision that would give a 50-percent tax exclusion on the annual income from a non-qualified lifetime annuity, up to $10,000 per year. Also tax exempt is 25 percent of income payments from Individual Retirement Accounts (IRAs) and qualified retirement plans other than defined benefit plans. The bill also excludes the value of longevity insurance from amounts subject to required minimum distributions while clarifying the taxation of payments from partially annuitized deferred annuity contracts.
“This legislation is a huge step in the right direction in giving Americans the ability to bolster their retirement security with guaranteed lifetime paychecks,” said Cathy Weatherford, CEO and President of NAVA, the Association for Insured Retirement Solutions. “We all know there is a growing problem with Social Security – just last month the Treasury Department announced the system will go broke four years sooner than we thought if we don’t make dramatic changes. Now more than ever, Americans need to plan long term, and to have the peace of mind that only lifetime payments can deliver.”
The bill received further praise from the Americans for Secure Retirement coalition. William Waldie, chairman of ASR, released a statement saying, “Retirement security is an increasing concern for Americans as traditional sources of retirement income become less reliable. Representatives Pomeroy and Brown-Waite should be commended for recognizing the importance of encouraging Americans to plan for retirement with options, such as lifetime annuities, that provide a steady stream of income in retirement.”