Advisors to Congress: Don't axe retirement plan tax benefits to cut deficit

(AP Photo/Susan Walsh)

Retirement officials are worried that Congress, in its efforts to reduce the federal deficit, will look to pilfer the tax expenditures for employer-provided retirement plans—which totaled $112 billion in fiscal year 2011, James Klein, president of the American Benefits Council, said in testimony before the House Subcommittee on Health, Employment, Labor and Pensions on Tuesday.

In its scramble to find ways to reduce the deficit, “some in Congress may overlook how these plans provide retirement savings incentives to workers at a significantly lower cost than the additional dollars needed to expand corresponding public programs,” Klein said. “Because members of the Education and Workforce Committee inherently understand the value of the employer-sponsored retirement system, you are especially well positioned to be a voice within the budget debate on the need for tax policy to support, not erode, employer plans and retirement savings.”