Defined Contribution Plans in Congress

The House Ways and Means Committee heard testimony on April 17 about the current system of retirement tax incentives. The five witnesses all suggested that eliminating the current tax incentives would weaken the state of retirement security. Chairman Dave Camp (R-Mich.) described three criteria the committee would consider: simplification; increasing participation, especially by those with lower incomes; and effectively targeting benefits. Judy Miller of the American Society of Pension Professionals and Actuaries, argued that the actual cost of the tax incentives is 54% less than projected by the Joint Committee on Taxation and the Treasury's Department's Office of Tax Analysis: "Every dollar that is excluded from income this year will be included in income in a future year. Unfortunately, that is not reflected in the cash basis measurement of the retirement savings tax expenditure."

Separately, Senators Rob Portman (R-Ohio) and Ben Cardin (D-Md.) announced that they would continue working together on legislation to promote retirement security, specifically mentioning their opposition to the Department of Labor's proposed changes to the definition of a plan fiduciary. Many members of ESOP companies worry that the regulation would result in appraisers being fiduciaries and increase the cost and complexity of establishing plans.