SURVEY SAYS: Most Beneficial Tax Reform Provision for Retirement Savers

Last week, I asked NewsDash readers, “Of the provisions affecting retirement plans, which do you think would be MOST beneficial to retirement savers?”

Two-thirds (66.7%) of responding readers work in a plan sponsor role, 26.2% are TPAs/recordkeepers/investment managers and 7.1% are advisers/consultants.

Of the provisions in the recently proposed tax reform legislation that were listed (It was not an exhaustive list of provisions), nearly half (47.6%) said maintenance of the limit on the amount of contributions that can be made to defined contribution (DC) plans on a pre-tax basis is the most beneficial to retirement savers. More than one-quarter (28.6%) chose “60-day-period to come up with an outstanding loan balance upon termination of employment or plan termination and roll the amount into an IRA or eligible retirement plan,” 14.3% selected “deletion of the six-month suspension of DC plan contributions after taking a hardship withdrawal” and 9.5% chose “allowance of a hardship withdrawal without taking a plan loan first.”

In verbatim comments, one reader isn’t sure any of the provisions are helpful to retirement savers, while another said a couple of the provisions listed are detrimental. A couple of readers believe the provisions will not pass. Editor’s Choice goes to the reader who said: “DB plans are still the most efficient method of delivering retirement income.”

Thanks to all who participated in the survey!

Verbatim

We need to make it easier for employees to save for retirement, NOT HARDER!

All of these are important and beneficial, but obviously maintaining the pre-tax limit will have the widest applicability.

It will be interesting to see how the initial impact on non-qualified plans changes as the bill makes its way through the legislative process.

In order to bring in more tax revenue, I wouldn’t oppose a lower limit on 401k deductions say around $10,000. Most people who really need to save for retirement are saving much less than that per year anyway and anyone who can afford to save $10,000 will probably invest outside of a 401k anyway.

The 2nd & 3rd options are detrimental, not beneficial, to retirement savings. If one needs a hardship withdrawal, then they shouldn’t be contributing. Loans on a DC plan are also not positive if one is wanting to retire. Loans on our plan are not allowed.

NEED THE REFORM SO HOPE SOME OF THE PROVISIONS COME THROUGH

None of these will pass.

Not sure any of the changes are really beneficial to help someone save for retirement.

Considering that there is an indication that the political tide is turning, I don’t think there will be a tax bill enacted in 2017.

DB plans are still the most efficient method of delivering retirement income.

it is not the bill itself that will be the biggest impact, it is all the unintended consequences that will have the most impact.

Although easing hardship withdrawals over loans probably won’t increase savings, it eases administrative burdens and makes sense for that.