To improve the long-term savings rate of the citizens of Levaska, the country' s legislature decided to implement a plan that allows investors to save up to $1, 000 per year in special accounts without paying taxes on the interest earned unless withdrawals are made before the investor reaches age sixty-five
Withdrawals from these accounts prior to age sixty-five would result in the investor' s having to pay taxes on all the accumulated interest at the time of withdrawal
A significant number of the citizens of Levaska will invest in the tax-free savings accounts well before they reach the age of sixty-five.