Two congressmen have introduced a resolution in the House seeking a "Sense of Congress" that current tax incentives for retirement savings should be retained in any reform of the tax code.
The resolution introduced by Reps. Jim Gerlach, R-Pa., and Richard Neal, D-Mass., was likely in anticipation that a new Congress and newly-elected president next year will try to craft a comprehensive overhaul of current tax laws in order to simplify the laws, reduce loopholes and cut tax rates.
The resolution has more than 100 co-sponsors in the House.
The bipartisan resolution provides that it is the “Sense of the Congress” that:
- Tax incentives for retirement savings play an important role in encouraging employers to sponsor and maintain retirement plans and encouraging participants to contribute to such plans;
- Existing tax incentives have increased the number of Americans who are covered by a retirement plan; and
- A reformed and simplified Tax Code should include properly structured tax incentives to maintain and contribute to such plans and to strengthen retirement security for all Americans.
Both are senior members of the House Ways and Means Committee, which will have to take the lead in drafting such legislation.
The bipartisan action was lauded by the American Council of Life Insurance and the Insured Retirement Institute.
The ACLI said the purpose of the resolution is recognition that the current tax incentives for retirement savings are “key to helping Americans achieve financial and retirement security.”
The ACLI added that, “Millions of people are relying on the savings within their annuities and workplace plans as their primary source of future retirement income. For this reason, Congress has long-supported public policies that encourage Americans to plan for retirement. The resolution, supported by over 100 cosponsors, reaffirms this support.”
IRI President and CEO Cathy Weatherford added that, “It has been well documented that the shift from defined benefit to defined contribution plans, longer life spans and the rising costs of health care are among the challenges that will put more of the burden of saving for retirement on the shoulders of individual investors.”
She said the impact of the recent “on retirement savings and income has only made matters worse.”
At the same time, she said, “those with insured retirement strategies have a higher confidence in their retirement expectations.
“The tax-deferred status of annuity earnings—not tax-free—is a key attribute that has led to Americans attaining financial security through lifetime income coverage,” one that is particularly of importance for middle-income Americans, who comprise the largest segment of annuity owners.”
Robert Miller, president of the National Association of Insurance and Financial Advisors, added that, “Tax-deferred retirement products, like annuities, Individual Retirement Accounts, and 401(k)s, are the bedrock retirement products for the middle-income Americans served by NAIFA members. That’s why NAIFA commends the bipartisan efforts of Reps. Jim Gerlach and Richard Neal and more than one hundred of their colleagues in the House of Representatives who sponsored a concurrent resolution supporting the current tax incentives for retirement savings.
“Legislators face difficult decisions as they confront the federal budget deficit, and NAIFA is glad that these Members of Congress are aware that we can’t solve the problems of today by making it more difficult for middle-income Americans to plan for the future.”