Putnam Investments chief executive Robert Reynolds called 401(k) changes floated as part of a possible tax overhaul “misguided” and a “gimmick” that would target younger workers and middle- to low-income employees, the very groups that need to save the most.
Reynolds said that any attempt to limit the pretax contributions workers could set aside for those retirement accounts should be shelved.
“‘Rothification’ is a bad idea because it goes after the workers that you want to participate and contribute,” Reynolds said Tuesday at a conference in Washington held by LIMRA. “To go after that set through tax reform is a misguided principle, and it is a tax gimmick.”
The comments come as debate over the issue continues in Washington. President Donald Trump tweeted Monday that there would be no changes to 401(k)s after reports that Republicans were considering limiting pretax contributions, a move that could help bolster revenue to pay for tax cuts. That measure had been drawing scrutiny from the retirement industry, which benefits from the flows into those accounts.
Heads of the House and Senate tax-writing committees have pushed back after the president’s tweet, signaling that retirement changes could still be on the table.
Reynolds helped to build one of the biggest 401(k) businesses while at Fidelity Investments and wrote a book about workplace savings. His current company increased the size of its 401(k) record-keeping business with the purchase of a unit from JPMorgan Chase & Co. in 2014.