Tax Reform Proposal Undermines Small Business Workers’ Retirement – We Need Your Help!

Tax reform proposals being hurried through Congress could have a dramatic impact on the retirement security of small businesses and millions of small business workers – we need your help to do something about it!

Both the Senate and House tax reform proposals include provisions that significantly reduce the tax rate on business income of pass-through businesses – partnerships, S Corporations and sole proprietorships – which comprise more than 90% of the businesses in the country. With the pass-through rates under consideration, many of those small business owners would be penalized for making retirement plan contributions, and for establishing a workplace retirement plan for their workers. And that’s not even taking into account the additional burdens of contributions to meet plan testing rules and plan administration costs, or the ERISA fiduciary risks associated with operating and administering a qualified plan.

“While the American Retirement Association supports reducing taxes on pass-through businesses, an unintended consequence of the pass-through proposals under consideration is that they undermine the incentives for these small business owners to sponsor a retirement plan for their workers,” explains Brian Graff, CEO of the American Retirement Association. The impact on small businesses is a particular concern since those who work for small businesses are significantly less likely to have access to a retirement plan at work than those who work for larger employers.

There is a simple solution to this problem: have the owner’s allocable retirement plan contribution be separately stated and applied solely against income that is taxed at ordinary rates.

We are lobbying hard to make sure that issue is addressed in the conference committee currently working on the legislation – but we need your help, both to help your representatives in Congress know how important this issue is, and to urge them to do something about it.

You can find out more about the issue here.

More importantly, you’ll want to speak out against this threat to small business retirement plans.

Tell Congress to leave retirement alone at

Add Your Comments


  1. Thomas C. Pitrone
    Posted December 7, 2017 at 10:21 am | Permalink

    Are you saying that the proposed rate reduction reduces the incentive for employers to contribute to qualified plans because employers’ tax rate will be too low?
    And is your proposed solution adding a new level of complexity to the tax code to recreate the incentive you say will be lost?

  2. url url'>Joe gordon
    Posted December 7, 2017 at 10:59 am | Permalink

    an LLC pass-through pays payroll tax on owner K-1 and since owner deduction for retirement is on Form 1040 as an adjustment, retirement contributions are only partially deductible; this fact is why so many LLCs converted to be taxed as S-Corps in the past few years.

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