With the release of its 2016 spending blueprint Monday, theObama White House officially signaled its intent to raise taxes onthe wealthiest Americans, in part by placing limits on retirementsavings.

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The proposed budget, which allots $4 trillion in spending forfiscal year 2016, proposes to cap tax-deferred saving in 401(k) and Individual RetirementAccounts at about $3.4 million.

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That amount of savings generates more than $200,000 in incomeannually when annuitized, an amount that should be sufficient formost, according to the Obama administration’s rationale behind theproposal.

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The vast majority of Americans would never feel thecap. In 2011, only one out of every1,000 Americans had more than $3 million in theirretirement accounts, according to the Employee BenefitResearch Institute. That said, many in the industry oppose the cap,especially in light of concerns over the likelihood of risinginterest rates.

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“Politically, it is convenient to target people who have saved$3.4 million,” said Jim Klein, president of the American BenefitsCouncil. “But the devil is in the details when you look at theimpact on younger workers and the inevitability that interest rateswill rise over the coming decades.”

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The problem is that annuity prices vary with interest ratesbecause insurance companies buy bonds to finance pay-outs. Whenbond yields are low, as they are now, annuities are more expensive.Right now a 10-year Treasury bond yield is just 2 percent. If itjumps to 5 percent (the rate in 2006), that $205,000annual annuity would only cost $2.2 million. In other words,the cap would drop, subjecting any higher amounts to more taxationwhile leaving the saver with less.

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In defending its proposed limit, the White House budget saidthat, “while tax-preferred retirement plans are intended to helpmiddle-class workers prepare for retirement, loopholes in the taxsystem have let some wealthy individuals convert these accountsinto tax shelters.”

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In further making their case, the White House and Department ofLabor noted that as many as 78 million working Americans — abouthalf the workforce — do not have a retirement savings plan at work.Fewer than 10 percent of those without plans at work save in aretirement account on their own, the administration said.

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The cap – an idea that Obama proposed last year as well – is arelatively small gambit in the budget’s larger effort to raiserevenues by increasing capital gains taxes, inheritance taxes, andtaxes on foreign revenue streams of U.S. multinationalcompanies.

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Investment Company Institute President and CEOPaul Schott Stevens said his organization “strongly opposed” anylimits on retirement-savings incentives.

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“Policy changes of this kind are simply wrongheaded. … Theadministration’s proposals would penalize workers trying to setaside a nest egg for retirement, discourage employers from offeringretirement plans, and add unnecessary complexity to retirementsavings.”

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A recent ICI survey found Americans overwhelmingly opposechanging tax incentives for retirement savings.

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The ICI also expressed its opposition to another proposal in thebudget: an auto-enroll IRA program that the administration assertswould give 30 million workers access to workplace plans. “Weoppose mandates on employers,” the ICI said.

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The Insured Retirement Institute, on the otherhand, applauded Obama for including “sensible solutions forexpanding access to retirement plans, such as auto-IRAs, forAmerican workers who do not have a workplace plan available tothem.”

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“Policies like this can go a long way toward helping Americansplan for their future financial security,” IRI President and CEOCathy Weatherford said.

Under the proposal, any employer with more than 10 employees thatdoes not offer a retirement plan would be required to automaticallyenroll their workers in an IRA. Auto-IRAs would let workers opt outif they choose. The DOL noted that auto-IRA proposals have beenendorsed by “independent scholars across the ideological spectrum,”including those affiliated with AARP, the Brookings Institution andthe Heritage Foundation.

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The auto-IRA proposal would provide employer a $3,000 taxcredit.

The president also proposed tripling the “start-up” credit, sosmall employers who begin to offer a retirement plan would receivea tax credit of $4,500. And small employers who already offer aplan and add auto-enrollment would get an additional tax credit of$1,500.

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The budget also contains a proposal to make retirement planavailable to part-time workers.

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Under current law, only 37 percent of part-time workers haveaccess to a retirement plan. The budget proposes part-time workerslogging at least 500 hours of service for three years should beeligible for enrollment in savings plans, extending access to about1 million individuals. Employers would not be required to providematching contributions.

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Also, states setting up their own automatic IRA enrollmentprograms would have greater latitude to do so under federal law.The budget would give the Department of Labor a “waiver authority”to allow a limited number of states to move ahead with their ownautomatic enrollment programs.

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Also, a rule prohibiting the Department of Defense fromauto-enrolling service members in the government’s Thrift SavingsPlan would be lifted. Each branch of the military could decidewhich members to auto-enroll, based on pay grade and who would bemost likely to benefit.

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“The nation needs to do more to help families save and give thembetter choices to reach a secure retirement,” the White Housesaid.

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Republican Rep. Paul Ryan, chairman of the House Ways and MeansCommittee, suggested Obama would have a fight on his hands on atleast some of his proposed reforms, calling the savings cap “envyeconomics.”

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