A bleak outlook at this year’s NAPA 401k Summit in Las Vegas about the tax incentives inherent in retirement savings plans had many wondering in the 401k structure currently in place would survive much longer.
“If tax reform happens, there is no way we come through unscathed,” American Retirement Association CEO Brian Graff somberly warned after mentioning the fast pace of change in Washington. “We might think it’s crazy to reduce the 401k contribution limit, but you have to understand tax reform is all about tradeoffs. Tax reform is ugly, but we have a seat at the table and are trying to make lemonade from lemons.”
“Making lemonade from lemons” includes forming the Save Our Savings (SOS) Coalition, announced Tuesday, and billed as “an alliance dedicated to protecting Americans’ retirement savings,” of which ARA is a founding member. The SOS Coalition “will work to ensure Americans continue to have access to the private sector retirement system and to meaningful savings incentives.”
“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,” Jim McCrery, former Ranking Member of the Ways and Means Committee, said in a statement. “On the other hand, misguided proposals could unintentionally undermine the incentive for employers to offer retirement plans or for working people to save.”
The collation points to research that shows Americans overwhelmingly support tax incentives for retirement savings: 80 percent of households who have a retirement account say its positive tax treatment is a big incentive to contribute, and about 90 percent of households oppose both taking away the tax advantages of retirement accounts and reducing the amount individuals can contribute to retirement accounts.
“Congress should be focused on policies that will expand and improve the private retirement system,” Rep. McCrery added.
Nationwide, 75 percent of private sector workers are offered a workplace retirement plan and 82 percent of workers who are offered a workplace retirement plan choose to participate.
“The convenience of being able to contribute directly to a retirement plan through payroll deduction makes it easy for millions of Americans to save for retirement.”
At the end of 2016, U.S. retirement assets totaled $25.3 trillion invested in the equity and fixed income markets, “making American capital markets the largest and most liquid in the world.”
The membership of the SOS Coalition includes:
- American Benefits Council
- American Retirement Association
- Committee on Investment of Employee Benefit Assets
- Defined Contribution Institutional Investment Association
- Employee Benefit Research Institute
- Financial Services Roundtable, Investment Company Institute
- New Economics for Women
- Northern Trust
- Plan Sponsor Council of America
- SPARK Institute
- Women’s Institute for a Secure Retirement.