Bloomberg
President Barack Obama's 2015 federal budget, unveiled Tuesday, calls for a 28% limit on retirement-related tax deductions and an overall cap on all retirement accounts, including pensions, that could bring in $1 billion per year in new tax revenue.
Based on current tax brackets, the 28% limit would reduce the tax advantages of retirement savings for people earning more than $183,000 or couples earning more than $225,000.
Brian Graff, executive director and CEO of the American Society of Pension Professionals & Actuaries said the budget proposal's “wrong-headed attacks on employer-sponsored retirement plans” amounts to a double tax on retirement and punishes contributions to 401(k) plans and the small business owners and their employees. “Who could blame a small business owner for thinking that if the government is going to penalize them for saving in a retirement plan, maybe they should not have that plan?” said Mr. Graff in a statement.
The overall cap for all tax-preferred retirement accounts would limit them to providing an annual retirement income of $205,000, which would currently cap tax-preferred accounts at $3.4 million.
Mr. Obama also called for $20 billion from increased Pension Benefit Guaranty Corp. premiums, although it was not clear whether that would come from single employer or multiemployer plans.
PBGC Director Joshua Gotbaum said in a statement that letting the agency raise or reduce premiums would “do it in a way that preserves retirement plans.”