Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Consultants
    • Coronavirus
    • Courts
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Opinion
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Russia-Ukraine War
    • SECURE 2.0
    • Special Reports
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • Climate Change: The Inescapable Opportunity
    • Impact Investing
    • 2022 ESG Investing Conference
    • ESG Rated ETFs
  • Defined Contribution
    • Latest DC News
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2022 Defined Contribution East Conference
    • 2022 DC Investment Lineup Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Performance Data
    • P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
    • Future of Investments Research Series
    • Charts & Infographics
    • Polls
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
    • 2023 Defined Contribution East
    • 2023 ESG Investing
Breadcrumb
  1. Home
  2. REGULATION AND LEGISLATION
February 20, 2012 12:00 AM

Obama budget going after retirement tax incentives

Hazel Bradford
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Olivier Doullery/Pool via Bloomberg
    Trimming: Barack Obama wants to cut the Labor Department budget while expanding Form 5500 electronic filings.

    President Barack Obama's fiscal 2013 budget proposal marks his first formal attempt to trim tax incentives for retirement savings.

    “Given that his first three budgets shielded retirement, the fact that the president has broadened his sights should give us pause,” said Derek B. Dorn, a partner in the Washington law firm of Davis & Harman LLP. Mr. Dorn is a former senior Senate tax aide whose clients now are plan sponsors and service providers.

    The 2013 budget plan sent to Congress on Feb. 13 aims at reducing a $1 trillion deficit that threatens to mar the record of Mr. Obama's first term, which ends this year. The proposal would lower to 28% from 35% the exclusion for defined contribution retirement plan contributions and deductions for IRA contributions for taxpayers with adjusted gross incomes of more than $250,000 if married and filing jointly or $200,000 if single.

    Now, a taxpayer in the 35% bracket generally saves $35 for every $100 put into a 401(k) plan, Mr. Dorn noted. Capping the value of that exclusion would generally limit the tax saving to $28 per $100 and make the $7 difference taxable.

    Mr. Dorn estimates this change would result in as much as $174 billion in additional revenue to the federal government over 10 years, based on a review of the administration's projections.

    Proponents of retaining the DC and IRA tax deductions as is are marshaling support in Congress, where more than 100 House members signed a resolution Feb. 16 saying that any tax reform measures should not change those incentives.

    Another $13 billion of tax revenue over 10 years would come from eliminating the carried interest deduction for general partners in private equity and other alternative investments, who would pay regular income tax rates instead of the current 15% tax rate on carried interest.

    Meanwhile, while the president called for a 5% overall budget reduction for the Department of Labor, funding for the Employee Benefits Security Administration would remain unchanged, with greater emphasis on electronic filing of Form 5500s. That form is the primary source of employee benefit plan data for the PBGC, the IRS and government auditors.

    In their budget request, EBSA officials predicted an increased number of investigations and indictments in fiscal 2013 for improper calculation or payment of pension and health benefits.

    The administration also proposed raising premiums charged by the Pension Benefit Guaranty Corp., adjusting them according to the funded status of pension plans to encourage companies toward full funding.

    The premium increases, estimated to generate $16 billion in revenue over the next decade, would take effect after two years of study and public comment. Assistant Labor Secretary Phyllis C. Borzi said in an online press briefing that allowing the “PBGC to price insurance realistically would put PBGC's finances on a sounder footing.”

    To handle increased regulatory and enforcement activity dictated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission budget calls for 191 new staffers in its enforcement division. The plan is to launch a series of risk-based initiatives “to identify hidden or emerging threats to the markets.” The focus of those efforts will be on money management firms that simultaneously manage structured products and investment funds; assets that are hard to value; and suspicious performance returns posted by hedge fund managers. The number of registered investment advisers under SEC oversight has grown over the last decade from 7,600 people managing $21 trillion in assets to 10,000 handling $44 trillion today.

    The White House budget plan, which would also overhaul pay and benefits for members of the military and federal workers, is getting a chilly reception on Capitol Hill. Although House and Senate leaders have yet to formulate legislative proposals for 2013 spending, they have attacked Mr. Obama's ideas as not going far enough to cut the federal deficit or rebalance the tax code and are pushing for deeper cuts on government programs like Medicare and Social Security. “The president will veto any bill that takes one dime ... without asking the wealthiest Americans and biggest corporations to pay their fair share,” a White House statement said.

    Speaking before the House Ways & Means Committee the day after the president's budget was delivered, Treasury Secretary Timothy Geithner argued that spending cuts alone would not address the federal deficit and pointed out that tax revenue from 2009 to 2011 as a share of GDP was at its lowest levels since 1950 because of individual tax cuts over the past decade that are “tilted toward the wealthy.”

    With Mr. Obama seeking re-election this year, “it's quite clear that he will be running on a populist tax message,” said Mr. Dorn, the Davis & Harman attorney.

    Related Articles
    White House budget targets carried interest, PBGC premiums
    Obama's budget bad for 401(k) incentives, ASPPA director says
    House Republicans unveil 2013 budget plan
    House panel targets retirement tax reform ideas
    PBGC scrutiny, Fed transparency part of GOP platform
    GAO: PBGC risk-based premium idea should advance
    Recommended for You
    Investors hail SEC guidelines on exchanges
    Investors hail SEC guidelines on exchanges
    Standards-of-conduct rules approved along party lines
    Standards-of-conduct rules approved along party lines
    SEC passes Reg BI package by 3-1 vote
    SEC passes Reg BI package by 3-1 vote
    Research for Institutional Money Management
    Sponsored Content: Research for Institutional Money Management

    Reader Poll

    January 25, 2023
    SEE MORE POLLS >
    Sponsored
    White Papers
    The Future of Infrastructure: Building a Better Tomorrow
    Fulcrum Issues: Equity Returns and Inflation — Choose Your Own Adventure
    What Matters Most in Considering a Private Debt Strategy
    Why pursue direct lending in the core middle market?
    Research for Institutional Money Management
    Are Factors a Thing of the Past?
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Consultants
      • Coronavirus
      • Courts
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Opinion
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Russia-Ukraine War
      • SECURE 2.0
      • Special Reports
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • Climate Change: The Inescapable Opportunity
      • Impact Investing
      • 2022 ESG Investing Conference
      • ESG Rated ETFs
    • Defined Contribution
      • Latest DC News
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2022 Defined Contribution East Conference
      • 2022 DC Investment Lineup Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Performance Data
      • P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
      • Future of Investments Research Series
      • Charts & Infographics
      • Polls
    • Careers
    • Events
      • View All Conferences
      • View All Webinars
      • 2023 Defined Contribution East
      • 2023 ESG Investing