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President’s Budget Is Bad News for Retirement Security

04/10/2013

Contact:
Bob Benish
312-419-1863
bob.benish@psca.org


Ed Ferrigno
202-559-8621
ferrigno@401k.org

Chicago (April 10, 2013) – President Obama’s just-released budget proposal contains several provisions that make it more difficult for American workers to save for retirement – and for business owners to offer plans to their workers – according to the Plan Sponsor Council of America (PSCA). 

“As Baby Boomers approach retirement, this is the last thing we need,” said Bob Benish, PSCA’s Interim President and Executive Director. “We should be looking at measures to help Americans save more, not setting up new obstacles.”

The Administration has decided that current law allows some Americans to save too much in tax-qualified retirement plans.  The budget proposes a new overall individual limit based on a current limit for just one plan.  Administration of this limit will be extremely complex, causing business owners to reconsider their decision to offer a plan.  When a business doesn’t offer a plan, it’s rank-and-file workers who suffer.

Another provision will cap the value of retirement plan contributions at the 28 percent tax bracket; taxpayers in higher brackets will not get the full tax benefit, which gives business owners yet another reason to reconsider why they offer a plan to workers.

The Administration has declared that current law permits accumulations “considerably in excess of amounts needed to fund reasonable levels of consumption.”  However, the Code’s strict nondiscrimination rules ensure that benefits are fairly distributed.   

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The Plan Sponsor Council of America (PSCA), a national, non-profit association of 1,200 companies and their six million employees, advocates increased retirement security through profit sharing, 401(k), and related defined contribution programs to federal policymakers. PSCA makes practical assistance available to its members with profit sharing and 401(k) plan design, administration, investment, compliance, and communication materials. PSCA, established in 1947, is based on the principle that “defined contribution partnership in the workplace fits today’s reality.” PSCA's services are tailored to meet the needs of both large and small companies with members ranging in size from Fortune 100 firms to small, entrepreneurial businesses.