Some tax experts are hailing the new individual retirement accounts -- proposed by Sen. William Roth (R-Del.), chairman of the Senate Finance Committee, and included in the new tax bill -- as a genuine, taxpayer-friendly innovation. The new class of IRAs would make some capital-gains distributions almost tax-free.

• Basically, an investor can place $2,000 of after-tax income in the Roth IRA each year, and let the gains on the account accrue tax-free -- similar to current IRAs.

• The new IRAs differ from regular IRAs, however, in that distributions from the accounts are tax-free -- rather than contributions being deducted from taxable income.

• The amount that can be put into a Roth IRA is phased out for individuals with adjusted gross income between $95,000 and $110,000 a year, and for married persons filing a joint return with adjusted gross income between $150,000 and $160,000.

• In order for a distribution to be tax-free, the withdraw must be made no earlier than five years after the first contribution was made, after the investor turns 59 and one-half, or be made to a beneficiary or one's estate.

• The distribution is qualified as tax-free if it is taken as the result of being disabled or if it is used for first-time purchase of a home.

Some tax experts are concerned, however, that at some point down the road politicians will start eyeing the potential tax revenue from these nest eggs and change the law. Young investors who had put their funds into these retirement vehicles would then be blind-sided if the government pounced, the experts warn.

Source: Perspective, "Tax-Free Cap Gains?" Investor's Business Daily, August 19, 1997.