The American Society of Pension Professionals & Actuaries claims savings from changes to the tax treatment for retirement plan deferrals are incorrectly calculated, because they're based on inflated forecasts.

With budget proposals eying changes to the tax treatment for workplace retirement plans, ASPPA took a look at how these plans would fare in integral deficit reduction plans brought to the table recently.

The group developed a multi-dimensional chart to examine the differences. That chart can be found here.

ASPPA CEO Brian Graff remarked:

“We applaud Congressional attempts to reduce the deficit, lift the debt ceiling, and balance the budget in a way that secures our nation’s future. However, including retirement savings tax deferrals in the same category as permanent deductions and exclusions may put American workers retirement security in jeopardy and not reduce the long-term deficit as expected because the proposal relies on inflated numbers.

In reality, traditional retirement savings tax incentives don’t eliminate income tax on retirement savings, they defer payment of income tax until workers retire and benefits are paid out. The cost of the incentives is overstated because most of the deferred taxes will be paid after the short-term window used in Washington’s budget scoring. Failure to recognize this bad budget math could decimate savings rates where Americans save most—at work. (ASPPA Tax Expenditure Study—May 2011)

We urge Congress to tread carefully. Raising short-term revenues by reducing the tax deferral incentives created to provide retirement security for millions of American workers and retirees is not in the long-term interest of American workers or their children.”