The federal budget that President Obama will propose today is expected to contain a provision limiting IRA and defined contribution plan accumulations to $3 million. Alternatively, it seeks to accomplish the same goal by imposing a limit based on the cost of purchasing an annuity equivalent to the top benefit allowed for defined benefit plans. Even before the plan was unveiled, the Employee Benefit Research Institute (EBRI) began analyzing its possible impact.
At the same time, the proposal has been blasted as a “plan killer” by Brian Graff, Executive Director and CEO of the American Society of Pension Professionals and Actuaries (ASPPA). “As business owners reach the cap, they will lose their incentive to maintain a plan, and either shut it down or greatly reduce benefits,” he said in a statement prior to the budget proposal’s release. “This would leave workers with a greatly diminished plan or without any plan at all,” he predicted.
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