Bill Proposes New Retirement Plan

"Too few Americans have put aside too little money specifically for retirement," Johnson says in a statement. "Encouraging people to save money in tax-free retirement accounts is one way to help people build a better nest egg for their golden years."

Treasury Secretary John Snow says that RSAs hold great promise for Americans to have more control over their own retirements.

Along with the Lifetime Savings Account proposal, Snow says, RSAs will make saving simple for everyone and for every purpose.

LSAs are similar to RSAs except that individuals could withdraw money at any time for any purpose from an LSA without penalty.

Jack Dolan, a representative for the Washington-based American Council of Life Insurers, says that the RSA initiative contains some good features that ACLI will look at closely. It is necessary, he says, to simplify the current alphabet soup of retirement plans.

But the LSA initiative, Dolan says, is bad policy right from the start.

LSAs, he says, encourage short-term savings at the expense of long-term savings. It is well documented, Dolan says, that long-term savings are more important and provide greater benefits to consumers.

Reproduced from National Underwriter Edition, July 1, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.