So last week, the President’s budget was released, and in it were the expected restrictions and limitations on qualified retirement plan benefits.
Kenneth Corbin covered the matter quite well in his article in last Thursday’s Financial Planning,
As my headline implies, not the first time that retirement benefits have been chips in the politics of budget reconciliation or whatever you choose to call this particular moment in our political and economic history.
So let’s take a walk down memory lane to the 1980s. For those of us who were there and for those of you that weren’t, here’s a brief time timeline:
1980: The time of the "Miracle on Ice" when a team of U.S. amateur ice hockey players defeated the vaunted Soviet Union professional all-star team in the semi-final game, then won the gold medal over Finland.
1981: The inauguration of Ronald Reagan as the 40th president of the United States followed by the release of the 52 Americans held hostage in Tehran for 444 days. And, of course, what we know now, but what we didn’t know then:
1982: We can stop right here. This was the year Congress passed tax legislation called, the Tax Equity and Fiscal Responsibility Act (TEFRA) in which benefit reductions and other restrictions were added to the tax laws. The first such pull backs since ERISA was passed in 1974. TEFRA was soon followed in 1984 by the Deficit Reduction Act (DEFRA) which added further restrictions.
So what can we learn from history?
Simply this: back then we couldn’t control whether benefits would be restricted. Nor can we now. But I do recall what some employers did back then. Those employers that had planned to adopt retirement plans or wanted to increase benefits did so before the laws were changed.
Something for employers to consider now, and not a bad reason to talk to them.
Jerry Kalish is President of National Benefit Services, Inc., a Chicago-based third party administrator. He also publishes
