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Said Jack Towarnicky, PSCA's Executive Director, "Plan Sponsors are very concerned about the potential impact of tax reform on their employees' retirement savings."
CHICAGO, IL, June 23, 2017 /24-7PressRelease/ -- - The Plan Sponsor Council of America (PSCA) today released the results of a new snapshot survey to gather insights on the impact of possible changes to tax preferences for retirement savings plans. Congress is considering reducing or eliminating pre-tax contributions as part of a plan to raise tax revenues and offset anticipated losses in tax receipts from lowering marginal income tax rates.
PSCA surveyed 443 plan sponsors in May 2017 to gauge the impact of limiting or eliminating pre-tax contributions to qualified retirement plans under various tax code provisions including 401(k) and 403(b).
Said Jack Towarnicky, PSCA's Executive Director, "Plan Sponsors are very concerned about the potential impact of tax reform on their employees' retirement savings." The survey found that more than 90 percent of respondents indicated that they strongly or somewhat agree that eliminating or reducing pre-tax contributions to retirement savings plans is a bad idea.
The full survey is available at www.psca.org/Snapshot_Roth. Other highlights of the survey include:
- Nearly 90 percent of respondents strongly or somewhat agree that eliminating or reducing the pre-tax benefits of 401(k) or 402(b) retirement savings plans will discourage employee savings in workplace retirement plans.
- Well over 90 percent of employers strongly or somewhat agree that future pre-tax savings limits on 401(k) and 403(b) retirement plan savings should continue to be indexed to inflation.
- Three-fourths of respondents to the survey currently offer a Roth feature to employees with thirty percent reporting 10-20 percent of eligible employees making Roth contributions and a quarter reporting contributions by 5-10 percent of eligible employees. Sixty percent of employers who don't currently offer Roth have evaluated offering it and chose not to. Of those not offering Roth, 60 percent are very or moderately concerned with the cost and administrative complexity of adding Roth.
- Eighty-five percent of plans are likely to, or would definitely continue offering a plan if Congress decreases pre-tax savings limits. This drops to 70 percent of plans if Congress changes the laws to Roth only.
- More than half of employers promote the pre-tax nature of plans to encourage savings to a high degree and more than half strongly agree with the statement that they rely on the organization's 401(k) or 403(b) plan to attract and retain employees.
Said Towarnicky, "As Congress considers options that would raise revenue to offset the cost of reducing marginal income tax rates, our tax-qualified retirement plans may be a target. Much depends on the specifics of any tax reform proposal. One option Congress may consider would be to limit or eliminate pre-tax contributions.
"These proposals could impact the more than 100 million Americans who participate in tax-qualified retirement savings plans. As the voice of America's retirement savers and plan sponsors, PSCA is working with other benefits organizations to educate Washington's policymakers on the potential impacts that changes to the tax code could have. These survey results will help inform policymakers on how certain changes may affect access to and participation in retirement plans."
PSCA recently held a Washington, D.C. Fly-In for its members on June 12. The Fly-In included a discussion of the survey results as well as presentations and panel discussions with the Internal Revenue Service, the Department of Labor, and Senate and House staff. For more information or to register for future PSCA events, visit www.psca.org/events. For more information on PSCA surveys, please visit https://www.psca.org/research.
About the Plan Sponsor Council of America
The Plan Sponsor Council of America (PSCA) is a diverse, collaborative community of employee benefit plan sponsors, working together on behalf of millions of employees to solve real problems, create positive change, and expand on the success of America's voluntary, employer-sponsored retirement system. With members representing employers of all sizes, PSCA offers a forum for comprehensive dialogue. By sharing our collective knowledge and experience as plan sponsors, PSCA also serves as a resource to policymakers, the media and other stakeholders as part of its commitment to improving retirement security for millions of Americans. For more information, visit www.psca.org.
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