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Congress weighs new investment accounts: 4 ways to prepare

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in Small Business Tax

President Bush is once again pushing Congress to radically reshape America's savings plan system, creating three new tax-preferred investment accounts.

Will his plan pass in 2004? With an election on tap, odds are below 50-50. But it pays to be prepared, so keep your eye on the bouncing legislation. Still, you won't have to delay your retirement planning for all of 2004. By summer, these proposals will either have strong momentum or, as it's appearing now, be shelved until 2005.

Here are the proposed new accounts in President Bush's plan:

Lifetime savings accounts (LSAs). They would be available to everyone, regardless of age or income. You would contribute up to $5,000 per year. While you couldn't deduct the contributions, all investment earnings and withdrawals would be tax-free.

Retirement savings accounts (RSAs). The rules would be similar to those for LSAs, but you'd have to wait until age 58 to make t...(register to read more)

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