Congressman Proposes New Tax-Free Savings Accounts
August 10, 2008
Representative John McHugh (R-NY) has introduced legislation designed to help workers save money during times of unexpected expenses or hardship, and later roll the money over into retirement income.
The Worker Savings Account Act, H.R. 6799, would create an account that works similar to an IRA, with an annual contribution limit of $5,000, indexed to inflation. Employers could provide matching contributions of up to $5,000 annually.
The bill would allow workers to save money tax-free and take tax-free withdrawals during periods of unemployment or disability. Contributions could be made to the account until the employee elects to take Social Security benefits.
The money could then be rolled over into a 401(k) or IRA, adding to the account owner’s retirement savings. Rising energy costs, food prices and other expenses have made it increasingly difficult for individuals and families to save, McHugh said.
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