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The Savings Coalition supports legislation to provide
incentives to increase personal savings for all Americans. Since its
establishment in 1991, the Coalition has played a leadership role in
influencing legislation to help all Americans save for their futures.
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In 2006, the Savings Coalition was integral to the
inclusion of the provisions that made the retirement provisions of
the 2001 EGTRRA bill permanent in the Pension Protection Act of
2006. In addition, the bill indexed income limits for IRAs for
inflation
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In 2001, the
Savings Coalition was influential in increasing IRA contribution
limits to $5,000, which will be adjusted for inflation after 2008,
in the Economic Growth and Tax Relief Reconcilation Act (EGTRRA). In
addition, the bill created provisions that allow American workers.
age 50 and over, to make an additional $1,000 'catch up'
contribution to their IRAs.
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In 1997, the Coalition was active in winning
passage of the Tax Relief Act of 1997 (TRA 97) which contained
significant incentives to help America’s savers. TRA 97 expanded
eligibility for traditional individual retirement accounts and
liberalized penalty-free withdrawal provisions for purchase of a
first-time home, education expenses, and health expenses. A new
Roth IRA was created which allowed for after-tax contributions and
tax-free distributions.
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In 1996, we were influential in getting Spousal
IRA contribution limits increased from $2,250 to $4,000 with
passage of the 1996 Tax Bill.
GOALS FOR THE FUTURE
A summary of our goals:
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As part of
its 2004, 2005 and 2006 budgets, the Bush Administration proposed a revolutionary initiative to replace
the current system of tax-preferred savings accounts covering all
Americans. Two new savings accounts would be created: The Lifetime
Savings Account (LSAs) and the Retirement Savings Account (RSAs).
LSAs can be used for any type of saving and would allow
individuals, regardless of age or income, to contribute up to
$5,000 a year and make penalty-free and tax-free withdrawals at
any time. Individuals could also contribute up to $5,000 to an RSA,
which could only be used for retirement savings, with tax-free
distributions after age 58. Contributions to LSAs and RSAs would
not be deductible but earnings accumulate tax-free and
distributions would be tax-free as well.
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The Bush Administration also proposes to create
Employer Retirement Savings Accounts (ERSAs) to simplify the
current system of employer-sponsored retirement plans. Under the
proposal, 401(k), SIMPLE 40l(k), 403(b) and Governmental 457 plans
as well as SARSEP and SIMPLE IRAs would be consolidated into the
ERSA Account. ERSAs will follow the existing rules for 401(k)
plans but the rules would be greatly simplified. Nondiscrimination
requirements for ERSA contributions will be satisfied by a single
test. By reducing complexity, the proposal would significantly
reduce employer retirement costs
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