ASPPA CEO/Executive Director Brian Graff issued the following statement in response to the double taxation of retirement savings in the tax reform proposal unveiled by House Ways and Means Committee Chairman Dave Camp:
“Chairman Camp’s tax reform proposal would subject all retirement plan contributions to the 10% surtax. The result is double taxation of these contributions — totally ignoring the fact that these contributions are just tax–deferred, not a permanent exclusion, and will be subject to ordinary income tax when they are withdrawn after retirement. Should this proposal become law, a small business owner could pay a 10% surtax on all contributions made to a qualified retirement plan today, then pay tax again at the full ordinary income tax rate when they retire. Penalizing small business owners for contributing to a plan is going to make them think twice about sponsoring a plan at all, and their employees could lose their workplace retirement plan. Double taxation is hardly what we hoped to see in any tax reform proposal.
We are also very concerned about the freeze on contribution limits until 2023. The cost of living in retirement is not going to be frozen. On top of the double taxation, this is a real blow to employer-sponsored retirement plans, and to American workers’ retirement security.
We were very disappointed to see these provisions in the proposal. Had the reduction to retirement savings tax incentives been limited to requiring 401(k) contributions above 50% of the contribution limit to be Roth only, we would have considered that acceptable as part of broader tax reform. Unfortunately, that is not the case, and we must strongly oppose this tax reform proposal given its negative impact on American workers’ retirement security.”