Compliance March 11, 2003

Annuity Tax Structure Legislation Introduced

November 27, 2001 (PLANSPONSOR.com) - House Ways & Means Committee members Representatives Phil English (R-Pennsylvania) and Karen Thurman (D - Florida) introduced the Lifetime annuity Payout (LAP) Act, which would change the tax structure of retirement annuities.
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Current tax laws are based on outdated actuarial calculations that encourage retirees to spend down their assets by the time they reach their eighties, despite higher life expectancies. The LAP would tax lifetime annuity payments at capital gains rates, as opposed to as ordinary income.

In introducing the legislation, English said that given the decline of traditional pension plans, “Americans need to receive a substantial portion of their retirement income in a guaranteed stream of income they can never outlive.”

– Camilla Klein                           editors@plansponsor.com

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