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Bush Quietly Abandons
Retirement-Savings Plan By John D. McKinnon WASHINGTON - President Bush is
poised to win sweeping changes in the U.S. tax system, but not the
top-to-bottom rewrite of retirement-savings incentives the White House was
seeking. The president's proposal called
for switching Americans from the dizzying array of tax-advantaged plans to a
simplified system consisting of two basic vehicles: lifetime savings
accounts and retirement savings accounts. But the plan was quietly abandoned
soon after its splashy release with the federal budget. The proposal would have worked
remarkable changes in federal tax policy, potentially using tax breaks to
encourage far more savings. It also would have weaned most Americans away
from current plans that provide up-front deductions, and given them tax-free
distributions from their plans after retirement instead, as Roth IRA's now
do. Some analysts say the proposal
would have put the U.S. well down the road toward taxing individuals'
consumption instead of income, a basic turnabout in the tax system. But few in the White House
realized the plan's scope. It was developed under ousted Treasury Secretary
Paul O'Neill, without much input from White House political advisers. When details emerged, some senior
White House officials said they were shocked. The plan also stirred concern
among groups that depend on the current employer-provided system, such as
some financial-services firms and benefits planners. As a result, administration
officials quickly signaled they didn't intend to push the issue this year. The outlook for most other
pension-related proposals also is clouded for the remainder of this year, in
part because the big tax-cut bill will drain away resources, pension
experts say. Potentially costly expansions of retirement-contribution limits
face an uphill battle, for example. And post-Enron proposals to strengthen employee protections in 401(k) plans appear to be slipping as a priority. Last week, the House again passed a bill to give employees more control over their plans, but the issue appears likely to die in the Senate, as it did last year. Copyright ©
2002 Global Action on Aging
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