Newspaper article The Christian Science Monitor

The Next Big Tax-Cut Idea

Newspaper article The Christian Science Monitor

The Next Big Tax-Cut Idea

Article excerpt

After pushing through tax reductions in each of the past three years, the Bush team is eyeing another way to trim Americans' tax bills: two tax-free savings accounts with fewer restrictions and much higher dollar limits than the current Individual Retirement Accounts (IRAs).

One plan, called a Lifetime Savings Account, would allow individuals to set aside up to $7,500 a year. The money could be withdrawn at any time, for any purpose, without penalty or tax.

The second, a Retirement Savings Account, would replace current IRAs and more than double the limit on contributions to $7,500. Money could not be withdrawn until retirement age. It would have no income cap, unlike current Roth IRAs, which are not available to couples with adjusted gross incomes over $160,000.

With both accounts, money would grow tax-free, and there would be no tax due when the money is withdrawn. Between the two accounts, each family member could set aside $15,000.

The appeal of these plans would be greatest among the well- heeled. …

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