Chairman Camp’s Proposal Raises Concerns for Retirement Security

2/27/2014

Contact:
Ed Ferrigno
Vice President, Washington Affairs
Plan Sponsor Council of America
202.641.7671
[email protected]

Washington, DC (February 27, 2014) - The Plan Sponsor Council of America (PSCA) applauds Chairman Camp for introducing his discussion draft for tax reform yesterday.  The proposal is the foundation for a long and, hopefully, productive debate that will result in a simpler and fairer tax code that will spur economic growth.  Unfortunately, several provisions in Chairman Camp’s proposal will diminish the retirement savings opportunities for working Americans.

The requirement that employee contributions above a certain amount to a 401(k) or similar plan be made on a Roth basis will add complexity and increase administrative costs.  Other provisions will directly impact Americans’ ability to save for retirement.  For example, complex rules that limit top earners’, often small business owners, ability to claim a full deferral for contributions made to their savings account will reduce the willingness to offer a plan to their employees.  The repeal of the small employer pension plan startup credit removes a valuable incentive to owners considering establishing a plan for their workers.  Additionally, eliminating inflation adjustments for contribution limits for ten years provides another reason for a business owner to decide against offering a plan.  Many workers will also be affected by the limit freezes.

PSCA believes that essential tax reform can be achieved without harming the successful employer-provided retirement plan system so critically important to America’s workforce.  As we noted, Chairman’s Camp proposal is merely the first act in a long play.  We look forward to working with him and other key policymakers as the tax reform debate continues.