The American Retirement Association says that by lowering small business income tax rates to 27% but not applying that to taxes on 401(k) withdrawals for small business owners from the 35% individual tax rate, this creates a disincentive for small business owners to contribute to their retirement plan, or even offer one to their employees.
Tag: tax reform
A tax reform bill was introduced by the U.S. House of Representatives.
In addition, tax-exempt employers would be subject to additional taxation rules.
The GOP tax reform proposal leaves 401(k) deferrals alone, but there are other significant reforms in the package that would change the treatment of hardship withdrawals and in-service distributions for DC, DB and 457 plans, among others.
Early interpretation of the 500 page tax legislation released by majority Republicans suggests the treatment of retirement account salary deferrals will largely be left alone.
Nearly one-third (32%) of survey respondents said if this provision of tax reform is passed, it will cause them to save less in their retirement accounts.
An EBRI report breaks down how specific age groups and salary ranges would feel the pinch.
Michael Barry, president of the Plan Advisory Services Group, discusses what is at stake for retirement savings in tax reform.