Obama's 2015 budget limits retirement tax deductions, increases PBGC premiums
Published: March 4, 2014 - Pensions & Investments
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.”