Deficit Commission Recommends Major Retirement Plan Changes

The National Commission on Fiscal Responsibility and Reform (often referred to as the president's deficit commission) has suggested as an "illustrative" tax reform that Congress should "consolidate retirement accounts; cap tax-preferred contributions to the lower of $20,000 or 20% of income, [and] expand [the] saver's credit." That is all that it says on the issue, so the specific effect on ESOPs is not clear. What is clear is that the commission's proposals will face tough going in Congress given the likely substantial lobbying that would be done on this issue by plan sponsors and the financial industry. Less dramatic proposals in the past, such as one during the Bush administration, have not gotten off the ground.