President Barack Obama's proposed 2015 budget would be a "disaster" for 401(k) plans at small companies, according to Scott Hanson, a certified financial planner at Hanson McClain Advisors in Sacramento, Calif.
""If you work for a Fortune 500 company, odds are you have a decent 401(k) plan and Obama's budget won't have much impact on you," Hanson said on CBNC.com.
"However, if you are like the millions of Americans who work for a small company, this budget may kill your chance for any sort of financial independence during retirement."
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That's because all contributions to 401(k)s from employees are fully tax deductible, but under the Obama budget, the deduction would be capped at 28 percent for high-income earners.
Those in tax brackets higher than 28 percent would still have to pay full taxes when they withdraw the money down the road. "This, of course, is double taxation," Hanson said.
"Given that most of the high-income taxpayers are business owners, are they really going to want to start a retirement plan that has the very real potential to be both professionally and personally bad for them?" he asked.
"Retirement plans are costly to set up and expensive and time-consuming to maintain. In addition to the hard costs, the Department of Labor can walk into a business at any time to audit the plan."
Hanson concluded, "The president's budget proposal, while attempting to restrict the wealthy from saving more for retirement, will actually create additional hardships for the working class.
"The wealthy will figure out ways to have a secure retirement, regardless, but the average worker will surely be hurt if this budget does indeed become law."
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