A proposed savings cap of $3 million that is included in President Obama’s budget proposal would unfairly punish savers, the American Society of Pension Professionals and Acturies said Friday.
The president's plan, which is expected to be released next week, would place a cumulative limit on individual tax-favored retirement savings accounts, including IRA rollovers.
“We vigorously oppose this proposal not only because it would unfairly punish good savers but because it is a ‘plan killer,’” Brian Graff, the CEO of the group, said in a statement. “As business owners reach the cap, they will lose their incentive to maintain a plan and either shut down the plan or greatly reduce benefits. This would leave workers with a greatly diminished plan or without any plan at all.”
Employer-sponsored defined contribution plans are they main way most Americans save for retirement.
“Proposals that cut incentives for business owners threaten this system that is helping millions of workers save for retirement. We urge the president to drop this proposal from the budget, and remove this threat to American workers’ retirement security,” Graff said.
The American Society of Pension Professionals & Actuaries is a national organization of more than 11,000 retirement plan and benefits professionals that serves as the educator, voice and advocate for the employer-based retirement system.