Senate Finance Committee Chairman Ron Wyden, D-Ore., said at a hearing Tuesday that “something is out of whack” between the $140 billion in annual tax subsidies for retirement savings and the number of people who don’t have enough saved for retirement.
Mr. Wyden said his committee would “take a good look at fixing this issue” as it considers tax reform ideas.
Mr. Wyden took particular aim at individual retirement accounts that he said “have become tax shelters for millionaires.” On Tuesday, the Government Accountability Office released a study commissioned by the Senate committee showing 9,000 high-income earners have IRA balances of more than $5 million. In 2014, the U.S. will forgo an estimated $17.5 billion in tax revenue from IRAs, which were designed to help people save for retirement.
Members of the Senate Finance Committee asked industry experts for their suggestions on better use of the tax code to increase retirement savings. While many witnesses called for simplified investment options and easier workplace access to retirement savings plans, former Vanguard CEO John C. “Jack” Bogle criticized the complexity and costs associated with DC plans, which he said “cry out for structural efficiency and cost reductions.”