WASHINGTON

A new Senate bill could provide a 50% tax exclusion on up to $40,000 in annual income from a non-qualified lifetime annuity.

The Retirement Security for Life Act, S. 1297, was introduced by Sens. Kent Conrad, D-N.D., and Pat Roberts, R-Kan., members of the Senate Finance Committee. If S. 1297 passes, a taxpayer could receive up to $40,000 per year in lifetime annuity income and keep half of that total out of taxable income.

A typical U.S. retiree in the 25% tax bracket who used a lifetime annuity could save up to $5,000 in taxes annually, according to officials at Americans for Secure Retirement, Washington.

S. 1297 is similar to H.R. 2748, a bill recently introduced in the House by Reps. Early Pomeroy, D-N.D. and Ginny Brown-Waite, R-Fla.

“This legislation is a critical component of retirement policy, and we are pleased that Congress is making helping Americans secure a financially sound retirement a priority,” ASR Chairman Bill Waldie says in a statement.

S. 1297 would be especially helpful to taxpayers who are not covered by employer-sponsored retirement plans and who build retirement savings by using a life insurance policy or by selling a home or business, according to the American Council of Life Insurers, Washington.