June 28, 2004
In this issue:
- RSA Legislation Introduced in House
- House Subcommittee Holds Hearing on Innovative Health Insurance Options
RSA Legislation Introduced in House
On June 25, Representative Sam Johnson (R-TX) introduced The Retirement Savings Account (RSA) Act (H.R.4714), the legislative version of the RSA proposal included in the Bush Administration's Fiscal Year 2005 budget. Senator Craig Thomas (R-WY) will soon introduce companion legislation in the Senate.
H.R.4714 would consolidate the three types of current-law individual retirement accounts (IRAs) into a single account. After-tax annual contributions of up to $5,000 per person would be permitted, indexed for inflation; there would be no income limit on an individual's ability to participate.
RSAs would be for only retirement savings; earnings on these retirement accounts grow tax-free and distributions after age 58 would be tax-free, and all withdrawals prior to age 58 (except death and disability) would be subject to a 10 percent penalty. Reasons for early withdrawal previously allowed under IRAs (such as home purchase, education, health costs or unemployed periods) would instead be facilitated through Lifetime Savings Accounts (LSAs), as established in pending legislation (H.R. 4078, also introduced by Johnson).
Further details are available in the press release provided by Rep. Johnson's office.
H.R. 4714 and H.R. 4078 represent two of the three legislative vehicles carrying out the Bush Administration's savings account proposals. Legislation on Employer Retirement Savings Accounts (ERSAs) are being drafted and will likely be released soon. Congress is unlikely to act on these bills during this session.
For more information, contact Diann Howland, Council vice president, retirement policy, at (202) 289-6700.
House Subcommittee Holds Hearing on Innovative Health Insurance Options
On June 24, the House Education and the Workforce Subcommittee on Employer-Employee Relations held a hearing to examine "Innovative Health Insurance Options for Workers and Employers." The witnesses and Subcommittee members focused on small employer trends, retiree health strategies under the Medicare Modernization Act of 2003 (MMA), the uninsured, and possible solutions to address rising health care costs.
Council staff have prepared a comprehensive report on the hearing, detailing the issues and testimony presented by the witnesses. We will provide similar reports as future hearings occur on this and other benefits issues. For more information, contact Susan Relland, Council health policy legal counsel, at (202)289-6700.
The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.