More On Tax Planningfrom The Advisor's Professional Library
- Health Insurance: Health and Medical Savings Accounts A Health Savings Account is a trust created exclusively for the purpose of paying qualified medical expenses of an account beneficiary. Although they are popular, they are not without their pitfalls and the regulations can be complicated. Learn more about how to avoid federal taxation on the accumulation and distributions of HSA.
- Cafeteria Plans The income tax treatment of cafeteria plans is key to their popularity. Learn how to maximize the tax benefits of these “flexible benefit plans”.
A survey released Thursday by the Coalition to Protect Retirement found 87% of Americans think retirement saving accounts should be “off limits” to Congress as a source of revenue. Among respondents who have a tax-deferred retirement plan, 95% agree.
Among the changes being proposed that would affect tax-deferred retirement accounts is the cap on retirement savings proposed in President Barack Obama’s 2014 budget.
The survey was conducted in October by Juncture Strategies and ORC International among 1,011 adults. The coalition comprises the American Benefits Council, American Council of Life Insurers, American Society of Pension Professionals and Actuaries, the ERISA Industry Committee, ESOP Association, Insured Retirement Institute, Investment Company Institute, Plan Sponsor Council of America, Securities Industry and Financial Markets Association, and the Society for Human Resource Management.
“Retirement savings incentives play an essential role in encouraging Americans to save and employers to sponsor retirement plans,” Hank Jackson, president and CEO of SHRM, said in a statement on behalf of the Coalition. “This isn’t just smart tax policy—it’s proven good sense.”
Two-thirds of respondents said saving for retirement was hard enough already and taking away or limiting tax-deferred status of some retirement plans will only make it harder, more confusing and more costly.
The survey found 68% of respondents said they would be less likely to vote for their member of Congress if they supported changes to retirement accounts’ tax-deferred status. More than three-quarters of respondents who have a tax-deferred retirement plan agreed.
“Given the vast numbers of baby boomers who reach retirement age every day, retirement savings incentives are needed more than ever,” Kenneth Bentsen Jr., president of SIFMA, said in a statement. “They are doing what they were intended to do — helping people who need them most to take responsibility for their own retirement security.”
Brian Graff, CEO and executive director of ASPPA, noted that cutting tax benefits on retirement plans might raise revenue now, but would only cost more in the future. “If Congress reduces the benefits of offering and contributing to retirement savings, fewer people will save. The result: more of tomorrow’s retirees will need to turn to the government for help, and that will mean more federal spending,” he said in a statement.
Check out 4 Big Changes to 401(k)s, IRAs in Obama’s 2014 Budget on ThinkAdvisor.