Reston, VA, June 19, 2003 – A new measure which encourages workers to annuitize a portion of their retirement savings was introduced in the House of Representatives on Thursday, June 12, 2003, by Congressmen Earl Pomeroy (D-ND), Johnny Isakson (R-GA), Phil English (R-PA), and Rob Andrews (D-NJ).

HR 2458, the Secure Annuity Income for Life Act (SAIL), encourages individuals to secure a lifetime income stream by annuitizing part of the money they receive from their tax-qualified retirement plans, such as 401(k)s or IRAs. Under the SAIL Act, individuals would be permitted to exclude up to $3,000 of retirement income payments from taxation each year.

“With Social Security and traditional defined benefit pension plans predicted to play a reduced role in providing retirement income in the future, and with people retiring earlier and living longer, healthier lives, it is more important than ever that they have a guaranteed source of income that they cannot outlive,” stated Mark Mackey, President and CEO of NAVA.

This legislation would provide up to $3,000 in tax-free retirement income. Specifically, it would allow for 15 percent of retirement income to be excluded from tax, with the amount of retirement income eligible for the exclusion capped at $20,000 per year, for participants in tax qualified plans who receive all or a portion of their retirement income in the form of a lifetime annuity payout.

The SAIL Act is similar to the Pension Preservation and Savings Expansion Act of 2003 introduced by Congressmen Portman and Cardin, which NAVA also supports. However, the amount of annuity income that could be excluded annually under the Portman Cardin bill is capped at $1,000 until 2008, and $2,000 thereafter. There is also a phase-out of the exclusion based on the income of the recipients of the annuity payments.

With millions of baby boomers set to retire over the next decade, NAVA believes it is appropriate for Congress to focus on helping people to not only accumulate assets for retirement, but manage those assets once they retire. Legislative incentives such as this address a critical component of sound financial planning—creating income that lasts a lifetime.

NAVA is a non-profit trade association located in suburban Washington D.C. NAVA provides a variety of services to the industry including educational forums, research, and conferences aimed at furthering the development of fixed and variable annuities, income annuities and variable life insurance. NAVA also maintains and supports an educational website for consumers at www.RetireOnYourTerms.com.