As Congress grapples over ways to carry out a tax policy overhaul, one organization is determined to making sure retirement savings don’t fall within striking distance of a lawmaker’s pen.
The Save Our Savings Coalition, an organization comprised of businesses and industry advocates, has formed to protect Americans’ retirement savings.
“Tax reform is a worthy goal that, if done right, could present policymakers a unique opportunity to preserve and enhance the system that’s helped millions of hardworking Americans save for retirement,” says Jim McCrery, former ranking member of the Ways and Means Committee. “On the other hand, misguided proposals could unintentionally undermine the incentive for employers to offer retirement plans or for working people to save.”
Various studies indicate that most Americans want to preserve the tax incentives of retirement plans. The Coalition points to research showing that 80% of households who have a retirement account say its positive tax treatment is a significant incentive to contribute. According to a recent study by the Investment Company Institute (ICI), about 90% of households oppose both taking away the tax advantages of retirement accounts and reducing the amount individuals can contribute to retirement accounts. A recent report by the Transamerica Center for Retirement Studies found that 34% of Americans believe that extending the Saver’s Credit to all filers regardless of income should be a priority for President Donald Trump and the new Congress – that’s roughly the same percentage of respondents who even knew about this incentive.
However, The Center for Retirement Research at Boston College reports that the U.S. government subsidizes retirement savings through 401(k) plans with $82.7 billion in tax expenditures every year. Considering the current political climate and much needed tax reform, some industry analyst fear that taxation of retirement accounts is on the table.
Back in June, policymakers unveiled a “blueprint” for simplifying the tax code, and the Tax Policy Center noted that the House Ways and Means Committee would examine existing retirement tax incentives, and look toward “consolidation and reform of the multiple existing incentives.”
But rather than dial back these benefits, Rep. McCrery says, “Congress should be focused on policies that will expand and improve the private retirement system.”
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