The chatter about retirement benefits leading up to President Obama’s State of the Union address was that he will direct the Treasury Department to create a new federal retirement savings vehicle aimed at workers who lack access to a retirement savings plan at work. In fact, the president did mention this new “myRA.” Unfortunately, though, he coupled it with an attack on the tax incentives for retirement savings.
“It is extremely unfortunate that while promoting the importance of retirement savings in the State of the Union address, President Obama chose to attack the 401(k) plan, the primary retirement vehicle for tens of millions of middle-income working Americans,” said Brian Graff, CEO of ASPPA and NAPA. “The president said the tax incentives for 401(k) plans primarily benefit those with higher incomes. In fact, 80% of 401(k) plan participants are middle class Americans making less than $100,000. The president said the tax incentives for retirement savings are "upside down" — meaning they mostly go to the wealthy. In reality, households making more than $200,000 only get 17% of the tax benefits from 401(k) plans, while middle income households enjoy the majority of such tax benefits.”
President Obama’s upcoming budget is slated to be released in March. Last year’s budget included his proposal to cap overall retirement savings, which would punish successful savers who played by the rules and will certainly lead to the termination of small business retirement plans once business owners reach the cap. Unfortunately, it looks like this year’s budget proposal will bring more of the same. ASPPA and NAPA will continue to work fight the ignorance that leads to this kind of destructive attack on the tax incentives for retirement savings.
Andrew Remo is ASPPA’s Congressional Affairs Manager.
