Articles Tagged ‘Eliminating tax incentives’

Debt Commission and 401(k) plans Collide

Monday, January 31st, 2011

The National Commission on Fiscal Reform and Responsibility (http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/
documents/TheMomentofTruth12_1_2010.pdf) has released its final report
to reduce the deficit of the United States.

Reducing the deficit is critical, but the proposal to eliminate certain retirement tax deductions is a slippery slope. Eliminating tax incentives for retirement savings will certainly adversely affect participant’s ability to retire and put further long-term strain on our economy.

Our firm just released our “401(k) Retirement Readiness Study” that showed that across all age groups and salary levels, 401(k) participants indicate a low probability of success. In order to succeed, participants need to contribute more money to retirement plans, not less. Limiting the deduction will further reduce employees’ desire to make contributions to their retirement – furthering the primary cause 401(k) and related investment options aren’t projected to meet demand for retirement for employees in their 60’s.

With defined benefit plans continuing to scale back or be eliminated, we need to incentivize employees to be saving for retirement. If we don’t, the limited ability for participants to retire will force the government to make up the difference. This is not a scenario any consumer, taxpayer, or 401k participant desires.

Tom Totten, CEO
Nyhart
www.nyhart.com

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