Capital Briefs: Bill Would Put Surpluses in Retirement Accounts

Senate Finance Committee Chairman William V. Roth Jr. introduced legislation Wednesday that would shift federal budget surpluses to personal retirement savings accounts for each American worker.

The program initially would be run by the government, but the bill calls for a three-year study to determine whether banks and investment houses could administer the accounts, a committee spokeswoman said.

Under the plan, half of the federal budget surplus over the next five years would be diverted to these accounts. The Congressional Budget Office estimates a $520 billion surplus from 1999 to 2003.

Starting Oct. 1, 1999, each U.S. worker would get at least $250 annually. Additional payments would be made to each person's account depending on his or her share of payroll taxes. For instance, someone earning $68,400 would receive about $3,800 over the five-year period, or a 14% rebate of payroll taxes.

Account holders would have three investment options: a mutual fund that tracks the overall stock market, a fund that invests in corporate bonds or other fixed-income investments, or U.S. Treasury bonds.

-Dean Anason