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CCH® PENSION — 12/08/10

ASPAA urges Congress to retain tax incentives for retirement savings

The American Society of Pension Professionals & Actuaries said it is "deeply concerned" that recommendations from the National Commission on Fiscal Responsibility and Reform would eliminate tax incentives for retirement savings and negatively impact the ability of working Americans to effectively prepare for retirement. The bipartisan commission is charged with the task of stabilizing, then reducing the national debt. According to ASPPA, as drafted, one of the options listed in the proposal would eliminate the tax incentive for employers to offer retirement plans to their employees, which ASPPA contends would ultimately hit low and moderate income workers the hardest.

ASPPA cited data prepared by the Employee Benefit Research Institute (EBRI), which suggests that only 5% of workers save for retirement on their own, without the benefit of an employer-sponsored plan. By contrast, 70% of moderate to low income workers earning between $30,000 and $50,000 participate in employer-sponsored retirement plans when they are offered. According to Brian H. Graff, ASPPA executive director and CEO, the proposed "Zero Option Plan," which would eliminate tax incentives for contributing to employer-sponsored retirement plans, such as 401(k) plans, would likely trigger mass terminations of company retirement plans. The 401(k) plan acts as the primary savings vehicle for most Americans and eliminating these tax incentives would strip them of critically important benefits and protections provided by ERISA, Graff said. "Simply put," Graff argued, "the retirement security of American workers will greatly suffer if the Deficit Reduction Commission's recommendations are enacted." Graff urged Congress to consider carefully the impact of the commission's draft recommendations on tax incentives for employer-sponsored retirement plans. "Don't rob America's future retirees to fund the deficit gaps of today," he added.

Source: ASPPA press release, November 10, 2010.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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