What is a Lifetime Savings Account?

Posted in Savings Account • October 10, 2010

In 2003, George Bush proposed a new tax-free savings and investment account called a “Lifetime Savings Account,” or LSA, as they are often referred to. A lifetime savings account gives its owner no income limits, high contribution amounts and a considerable amount of freedom to withdraw, spend and invest money.

Lifetime Savings Account Rules

If you open a lifetime savings account, you can contribute up to $7,500 to it every fiscal year. What you put in is not tax-deductible, but whatever returns you earn from your LSA are tax-free. That’s a pretty good deal.

In addition, any withdrawals you make would likewise be tax-free and penalty-free. Compare that to a 401(k) or an IRA, both of which have heavy penalties for early, pre-retirement withdrawals.

Advantages of a Lifetime Savings Account

That’s one of the biggest advantages to an LSA – with no age restrictions, you can use your LSA to save for anything you want, whether it’s college tuition for your kids, your own retirement or that fancy fur coat you’ve always wanted. The point is the LSA can be for whatever you want, no matter how frugal or frivolous.

In addition, people who open a lifetime savings account would be able to rollover money from different kinds of accounts into it. For example, if you have a Coverdell Education Savings Account, you could roll the money in it into your LSA if you wanted to. In future years, the maximum amount of money you could contribute to your lifetime savings account would rise to keep pace with inflation.

In order to find out more about lifetime savings accounts, be sure to sit down with your financial advisor and go over any and all questions you might have. You may find the lifetime savings account to be a very interesting and compelling investment vehicle.

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We would love to hear your comments and feedback

  • Iosepu Karaloti

    I am a retiree and earning $450.00 from Social Security and a $500.00 from my Pension-Plan and I would like to open a Lifetime Saving Account. I want to know if I am eligible for this so-call Lifetime Saving Account. The idea is that someday I will be gone and I would like to know how this whole-deal will work for my children. If, one day I will leaves this world behind and I want my children to benefit-out of these money I had put-away. Please, sent me a brochure contained details of the said – LSA stated here. I will be residing at this address after a month from now, please sent to:

    Iosepu Karaloti
    P.O.Box 1265 Koror Palau
    Western Caroline Islands 96940

    Thank you

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