Following through on a proposal by President George W. Bush in his 2003 State
of the Union address, legislation has been introduced into both houses of Congress
creating Retirement Savings Accounts (RSAs). RSAs are meant to simplify retirement
planning options by streamlining Individual Retirement Accounts (IRAs).
In the House of Representatives, Representative Sam Johnson (R-Texas) introduced
H.R. 4714, the Retirement Savings Account Act, while Senator Craig Thomas (R-Wyoming)
introduced companion legislation in the Senate.
H.R. 4714 would consolidate the three types of IRAs now available into a single
account. After-tax annual contributions of up to $5,000 per person would be
permitted with no income caps. Earnings on these retirement accounts grow tax-free,
and distributions after age 58 would also be tax-free. The accounts would be
reserved for retirement savings only, as evidenced by a 10-percent penalty tax
on withdrawals before the age of 58, except in cases of death or disability.
Secretary of the Treasury John Snow supports the legislation. "Retirement
Savings Accounts will be a terrific tool to help Americans plan and save for
their retirement, with no limitations based on age or income status," he
said. "They will also simplify saving, which will help Americans reach
the goal that we all share: a secure retirement."