A news release from Representative Stephanie Tubbs Jones (D-Ohio) said the Flexible Retirement Savings Act, co-sponsored by Representative Nancy Johnson (R-CT), helps people to annuitize a portion of their savings as a way to protect against longevity or outliving their savings. In addition, it also breaks down barriers that discourage people from coupling a life insurance policy or an annuity with a long-term care policy, the announcement said.
“As the American population ages, it is important that we begin to address the various public policy changes that will need to take place to accommodate the estimated 87 million Americans over the age of 65 that will be living in our society by the middle of this century,” Tubbs Jones, asserted in the news release. “This legislation proposes common sense solutions to the problems posed by an aging society such as long-term care and lifetime savings through Annuities.”
The bill includes these provisions, according to the announcement:
- Creates a tax incentive for people to use lifetime annuities. The proposal would exclude from federal income taxes half of the payments from a non-qualified, lifetime annuity up to an annual limit of $20,000 .(A non-qualified annuity is purchased with after tax dollars and is not part of an employer-sponsored retirement plan).
- Grants the same tax-free treatment that already exists for stand-alone long-term care to combination insurance. In addition, the bill provides more flexibility by allowing people to exchange their life insurance or annuity for a long-term care policy tax free.