Compliance August 8, 2005

Bill to Increase Retirement Savings Tax Credit

August 8, 2005 (PLANSPONSOR.com) - A bill has been introduced in Congress that would increase the size of the tax credit for retirement savings contributions.
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According to a news release on US Representative Connie Mack’s (R-Florida) Web site,  H.R. 3574 , called the Lifetime Prosperity Act of 2005, includes:

  • making the Retirement Savings Tax Credit permanent
  • eliminating the progressive scale for the Retirement Savings Tax Credit and allowing all filers eligible for the credit to receive a 50% credit for their contribution
  • raising the cap on income to receive the credit to $95,000 for single filers and $150,000 for joint filers – the same as the cap to contribute to a Roth IRA
  • raising the Retirement Savings Tax Credit one can receive in a year to $1,500 for individuals and $3,000 for joint filers.

The bill is being touted because it provides for Roth IRAs to be owned by children of any age and provides a tax credit for contributions made to Roth IRA accounts for children up to the age of 25.

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The bill has been sent to the House Ways and Means Committee.

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