ERIC President and CEO
"Chairman Camp should be applauded for his efforts on trying to simplify the tax code and lower the overall tax rates. We respect the time, effort, and thoughtfulness that Chairman Camp and Committee members invested in developing this plan, but nevertheless, we do have concerns with his proposed changes to the current tax incentives for retirement policy.
"We understand that retirement tax incentives are a tempting target based on the congressional budget score-keeping methods, but these incentives are not what we would consider 'closing tax loopholes.' Elective deferrals to traditional retirement accounts are still subject to taxation and should not be confused with exemptions and exclusions. We believe the current elective deferral limit works well and should be maintained, as workers need flexibility to be able to save more when they are able and less when under financial constraints. The proposal could adversely affect this flexibility.
"In addition, we are concerned with the added administrative complexity and compliance burdens that will be placed on large employers for essentially forcing all plan sponsors to offer Roth-type arrangements. The voluntary nature of the private sector retirement system and the ability for companies to design plans based on the needs of their workforce are critical to their success. We also caution policymakers that uncertainty and increased complexity surrounding the 'rules of the game' for retirement savings will likely result in a decrease in contributions to retirement plans by working Americans.
"We believe that Chairman Camp can accomplish his stated goal (which we agree with) of reforming the tax code to make it simpler and fairer for families and employers, and help strengthen the economy without undermining the very successful employer-provided retirement savings plans."
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