The SPARK Institute has added its name to the list of retirement industry groups upset by proposed changes to retirement savings incentives included in President Obama's 2014 budget.
"At a minimum, the proposals will increase the costs ultimately borne by all American workers trying to save for retirement, not just the high-income workers whom the provisions target," said Larry Goldbrum, general counsel of The SPARK Institute. "At worst, the proposals will adversely impact the availability of plans and the amounts contributed by employers, particularly among small businesses."
In his budget, Obama proposed a $3 million cap on retirement savings, which many industry groups have argued could have dire consequences for small business owners.
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The SPARK Institute pointed out that the savings cap would create a level of complexity around the administration and operation of all retirement plans that could discourage business owners from offering them in the future.
In a letter to the House Committee on Ways and Means and the Working Group on Pensions and Retirement, the Institute also expressed concern about new complexities in the latest proposal that would limit the value of exclusions for employee deferrals in 401(k) plans. The most recent proposal included provisions that tried to address criticisms of an earlier version that would have resulted in double taxation of deferrals that exceeded the limitation.
The proposed correction "would require tracking individual taxpayer basis on the disallowed amounts, which will add further complexity for employers who already struggle with administering complex plan rules," Goldbrum said.
He added that he realizes that the country needs to resolve the country's budget and deficit problems but asked the committee not to do so by adding complexity and costs to the voluntary employer-sponsored retirement plan system that is already burdened by regulatory complexity.
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