13.4: After-Tax Dollar Savings

Permit taxpayers to contribute after-tax dollars to an account, contributing as they choose until the account balance reaches $100,000.

Other Information:

An Alternative Option for Savings. For some purposes, many taxpayers today prefer to save after-tax dollars as permitted through the current-law Roth IRA rather than paying tax when funds are withdrawn as under today's traditional IRA. This Roth-style alternative maintains the principle of a single incidence of taxation but may result in further increased saving by giving savers an additional option. To allow such accounts for those who feel they need them, the plan permits taxpayers to contribute after-tax dollars to an account, contributing as they choose until the account balance reaches $100,000, with a limit of one account per adult taxpayer. The income earned on the account is tax-free, and disbursements from the account are tax-free for any purpose.

Stakeholder(s):

• Taxpayers

Indicator(s):

Indicator:1

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