Retirement Plan Guidance is on EBSA’s Gift List for 2014

The Department of Labor’s Employee Benefits Security Administration (EBSA) recently released an update to its guidance agenda, including a number of priorities that can be expected to affect retirement plans.  Clearly there are some surprises in this updated priorities document and perhaps some reason for concern as well.

The most anxiously awaited EBSA guidance are the regulations defining when an advisor, service provider, or other person may be considered a fiduciary in their dealings with a plan or retirement account.  Of course, it is not just the defining, but the duties and obligations that accompany that role, that will matter.  We were surprised to learn that EBSA has now targeted the month of August, 2014, for issuance of these re-proposed regulations.  The expectation over many months has been “imminent,” based on EBSA comments.  But, in every instance, there has been a delay and a resetting of expectations.   

Perhaps the August 2014 target is an indication that new Secretary of Labor Thomas Perez is not completely comfortable with the expansive dimensions these regulations reportedly will have, as formulated under the guiding hand of Assistant Secretary Phyllis Borzi.  Or, given the widely held belief that Secretary Perez is one of President Obama’s more liberal cabinet members, caution and industry sensitivity may not be the motive at all.  Possibly the new August target is nothing more than a fail-safe reset of expectations intended to avoid the embarrassment of another missed deadline.  Hopefully the delay will result in a workable regulation that corresponds to what the SEC will be doing, that protects retirement plan participants and provides and will temper what many have feared will be regulatory overreach and a potential threat to IRA owners’ continued access to advisory services.

Another item on the guidance plan, with a much closer April, 2014, target date, is “standards for brokerage windows” in individual account type plans, such as 401(k) plans.  A brokerage window within a plan investment suite offers participants what can be virtually limitless investment options.  Readers will recall that Field Assistance Bulletin (FAB) 2012-02R gave us EBSA’s assurance that the very detailed investment disclosures required for a plan’s designated investment alternatives (DIAs) under fee disclosure regulations would not apply to investments chosen under a brokerage window.  For that reason many were surprised to see this on EBSA’s regulatory agenda. 

However, the agency did warn in FAB 2012-02A that it would be unacceptable for a plan to offer only a brokerage window in order to avoid the need for any DIA disclosures.  EBSA cited “…ERISA Section 404(a)’s general statutory fiduciary duties of prudence and loyalty,” noting that “…fiduciaries may have duties under ERISA’s general fiduciary standards apart from those in the [fee disclosure] regulation,” and that the agency would “… determine how best to assure compliance in a practical and cost effective manner, including, if appropriate, through amendments of relevant regulatory provisions.” 

The FAB’s reference to “amendments of relevant regulatory provisions” sounds ominously like we could see a reopening of what most thought was a closed chapter in the fee disclosure drama.  “Brokerage Windows II” is a sequel we might not want to see.  

One item the industry will welcome seeing EBSA revisit is the current regulations that plans must follow when selecting a safe annuity for plan participants or beneficiaries at payout time.  A reasonable safe harbor, one that does not require a plan administrator to be both a psychic and a Harvard economist when selecting a safe annuity, has been sorely needed.  Existing regulations are next to impossible to confidently meet.  This IS good news.

Also worthy of comment is the distant timeline—again, August, 2014—for proposed regulations on including lifetime income projections on participant benefit statements.  Given the detail in EBSA’s advanced notice of proposed rulemaking in May of 2013, and the August, 2013, close of the public comment period, coupled with the urgency EBSA seemed to attach to the issue, this distant timing is a little surprising.  Perhaps the answer lies in the kind and quantity of public comments the agency received on its very complex proposal.  Time will tell.

As each of looks forward to unwrapping something special on Christmas Eve or Christmas Day, it appears we can also look forward to EBSA unveiling some gifts of its own in 2014.

IRS on the Lookout for Rollover, Valuation and Related Abuses

Those who do not take note of rulings by the United States Tax Court may have missed a recent decision that has caused many in the retirement plans community to sit up and take notice. 

The case, Ellis v Commissioner, involved a taxpayer who funded a business start-up with assets rolled over to an IRA from a former employer’s qualified plan, a transaction referred to as a rollover-as-business startup (ROBS).  Unfortunately, in the process of establishing a used car business with the rolled-over funds, causing the business to enter into a real estate rental agreement with related parties, and paying himself for services to the business, the IRS determined that the defendant ran afoul of the prohibited transaction rules.  As a result, the IRA that had funded the used car business start-up was disqualified, deemed distributed, and the defendant became subject to substantial tax and penalty consequences.

We have known for some time that the IRS has been “making a list, and checking it twice,” when it comes to ROBS to inject a little seasonal flavor.  The Service is deeply concerned about transactions that abuse the tax rules in order to avoid legitimate taxation. 

Some feel this U.S. Tax Court ruling is a “shot across the bow,” bearing in mind that it was the Service that first disqualified the defendant’s IRA, which—following appeal—led to the involvement of the Tax Court.  It certainly should serve as a caution to anyone who might consider using accumulated retirement assets to start a business.  The real scrutiny began roughly five years ago with an IRS compliance initiative targeting ROBS arrangements. 

More typical than the IRA rollover example in this Tax Court case, in the ROBS process a taxpayer sets up a corporation, which establishes a qualified plan.  The plan first accepts the rollover, then uses it to purchase stock issued by the founding corporation.  The stock is in the plan, and the rollover cash used to purchase it is used by the corporation (the owner) to fund a business start-up, or perhaps purchase a business franchise. 

Not all such transactions are considered abusive or illegal.  Some of these ROBS arrangements have been approved in the past.  But some, as in Ellis v Commissioner, either cross the line as prohibited transactions, or break ERISA rules for plan operation.  One example of a post-ROBS operational failure is allowing the owner’s account to purchase the corporate stock, an investment that is denied to others who—now or later—may participate in the plan.  Besides the potential discrimination in such a situation, there may also be issues with establishing the value of the corporate stock purchased with the rollover assets.  Often, the amount of the rollover and the value of the stock purchased by the plan are—too coincidentally— virtually the same, even when the corporate entity has yet to do a dime’s worth of business.  That can be seen as a red flag to a reviewer.

The IRS is also interested in IRA and employer plan asset valuation in more general terms.  Valuation is a special concern when an investment is not traded on a public exchange, and is therefore hard to value.  Such investments may include real property, securities options, debt obligations, partnership interests, and others.  Valuation is of particular importance when potentially taxable distributions are taken from retirement arrangements, or when a taxpayer executes a Roth IRA conversion, or an in-plan Roth rollover (IRR) within a 401(k), 403(b) or 457(b) governmental plan.  Like a distribution of pre-tax assets, a Roth conversion or IRR is a taxable event.  If investments are unintentionally or intentionally undervalued, the asset owner may gain, while the U.S. Treasury—and American taxpayers—lose.

One clear manifestation of this asset valuation concern is the DRAFT 2014 Instructions to Forms 1099-R and 5498, released in June.  In these draft instructions the IRS specified that both fair market values reported on Form 5498, IRA Contribution Information, and distributions reported on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc., were to identify hard-to-value assets. 

The IRS has since made this significantly more detailed reporting an option for 2014, due possibly to challenges involved in information gathering and systems programming for custodians, trustees, and plan administrators.  But, make no mistake; the IRS intends to collect more detailed information on the presence of such assets in tax-advantaged retirement savings arrangements.  The objective can only be to ensure that such assets are not mis-valued in an attempt to avoid proper taxation.

Like it or not, such initiatives serve notice that the Service intends to close some of the cracks through which they believe questionable transactions may have been falling and serves as a warning that anyone entering into one of these arrangements do so with an eye towards the prohibited transaction rules and IRS concerns.

Academic’s Social Security Assessment is Best Argument for Retirement Saving

One of the hot potato issues in Congress over the last several sessions has been Social Security; preserving its solvency, and how best to run a program that provides millions of Americans with replacement of a share of their working-years income during retirement.  “Hot potato” because dialogue on how to maintain this important benefit for older Americans almost inevitably leads to two opposing solutions: reduce benefits, or raise more revenue, chiefly through taxes. 

Regardless of your political leanings, it is likely that one or the other of these options will raise your blood pressure.  To some, the Social Security benefit is a sacred cow that can’t be sacrificed at any cost.  To others, the program and the taxes that support it are increasingly becoming a drag on the economy.  But politicians of all stripes recognize Social Security as the “third rail of American politics.”  It’s a comparison to the danger of getting anywhere near the “third rail” that carries electricity to a subway or commuter train.  Do so at your own peril!

Some, however, can critique and comment on Social Security from a safe distance without getting bloodied in the political slugfest.  One who recently did so from her safe vantage point as an academic also happens to be one of the leading critics of the defined contribution retirement system, Alicia Munnell, Director of the Center for Retirement Research at Boston College. 

In an April, 2013, Bloomberg article Ms.  Munnell stated that the retirement savings workers need beyond that provided by Social Security “cannot be met by a voluntary employer-based system.”  Ms. Munnell advocated “…new, mandatory … retirement accounts—initiated by the federal government but managed by the private sector… [to] replace 20 percent of preretirement earnings.”  In a political climate in which the concept of mandatory health insurance has fractured the Congress and the national electorate to a degree rarely before seen, it’s hard to imagine that federally-mandated retirement saving will find its way onto many lawmakers’ to-do lists.  

Ms. Munnell’s latest retirement analysis is entitled “Social Security’s Real Retirement Age is 70,” published by The Center for Retirement Research.  It is a source of some good information about the relative income replacement effects of workers beginning to receive Social Security benefits at various ages, from the earliest permissible age—62—to as late as age 70.

The study begins with the unequivocal assertion that “Social Security was designed to replace income once people could no longer work.”  Perhaps this is taking Ms. Munnell too literally, but in point of fact Social Security was originally intended to be a safeguard against destitution, to provide a minimum level of income after one’s working years, not to “replace income once people could no longer work.”

Ms. Munnell goes on to provide what many will find to be a valuable and insightful history of the evolution of Social Security benefits, from changes implemented in the 1960’s to allow early access to benefits at age 62, to congressional action in the 1970’s and 1980’s granting enhanced benefits to those who wait beyond normal retirement age, waiting to as late as age 70. 

There is a strong implication that the maximum benefits that are now available only to late-claiming retirees should be available to those who retire at younger ages, because not everyone will be able—or want—to work to age 70.  Ms. Munnell states that when you factor in the Medicare premiums that are deducted from Social Security payments, and the taxation of Social Security benefits for many retirees, “Retiring at age 62 will not be a reasonable option for those who have any ability to stay in the labor force.” 

The answers to this are twofold.  The first answer is “Well, that depends.”  It depends on whether the retiree has other savings, in the form of IRA or employer plan assets, nonqualified savings, property, etc.  Keeping in place robust tax-advantaged saving opportunities—like IRAs and employer plans—is a key to making such savings possible.  These savings, combined with Social Security and Medicare benefits, will hopefully provide a satisfactory quality of life for many Americans and allow them to achieve their retirement goals.

The second answer is really a question: is it necessarily everyone’s right to be able to retire at age 62—or before age 65, 67, or even 70—when life expectancies are rising as they clearly have been?  It may be the hope, or the ideal, of many to have the option of spending 20, 25 or more years in full retirement.  But that may not be realistic for everyone.  Nor should it be looked at as an entitlement.

Retirement at earlier ages may be an option only for those who make a contribution toward that end through their own saving.  And for that reason, we need to strengthen—not give up on—the private retirement system.

Why Can’t More Lawmakers Be Like These Guys ?!

Show of hands: who believes that lawmakers in Washington, D.C., are doing a good job governing our country?  If this fictitious exercise actually took place, I feel safe in predicting that most hands would remain firmly at our sides, in our laps, or perhaps in the arms-crossed pose that our children see when they have misbehaved.  In other words, not too many approving hands raised.

There are certainly those who believe that the current gridlock we are witnessing in our nation’s capitol is a net positive, and that failure to enact laws at the federal level means less government intrusion in our lives, a goal some feel is always worth seeking.  While it may be true that our lives are sometimes over-regulated and interfered with and that “less is more,” our world truly is much more complex economically, socially and politically than the world our country’s founders faced when they set up our form of government.  While less government intrusion may be desired, it still takes a functioning government to keep our nation strong, competitive, and in-step with the rest of the world.  Few would characterize the current lack of cooperation, the intolerance for differences of opinion, and sometimes outright bitterness in Washington, as conducive to a functioning government.  

One notable exception to this partisan dysfunction is being demonstrated by two lawmakers, each from a different party, and each from a different body of Congress.  They are perhaps more visible to those in our industry because they share a legislative priority—retirement security—that is vital to us.  But, even putting any special interest aside, they seem to behave like statesmen of old; respectful, constructive, realistic, practical lawmakers who want to get a job done.  A job they believe is in the best interest of the American taxpayer.

Rep. Richard Neal (D-MA) and Sen. Orrin Hatch (R-UT) have each introduced similar, if not quite “matching bookends” legislation in their respective congressional bodies, bills primarily intended to simplify and enhance retirement saving.  And, hoped for as a natural outcome, to yield better retirement preparedness for American workers.    

The details of their bills, H.R. 2117 and S. 1270, are not the point to be made here.  Suffice it to say they share more similarities than differences, are geared toward making employer-sponsored plans more available to American workers, to make plan administration simpler and more straightforward, and provide genuine incentives to put away more dollars for retirement purposes.

Perhaps the most encouraging thing about these long-time lawmakers is that they “get it” when it comes to the real impact retirement saving has on the U.S. budget.  Some lawmakers, journalists and policy wonks label retirement saving as a cost—a loss—in terms of federal tax revenue, and a significant contributor to our federal budget deficit.  Some of these lawmakers would greatly curtail tax-advantaged retirement saving.  Hatch and Neal recognize that tax-deferred saving is not a loss to the budget, but simply moving taxation “down the lunch line,” to be taxed in a later year when assets are withdrawn by a retiree, or by a saver who needs these assets prior to leaving employment.  Never mind the fact that retirement saving is a HUGE contributor to the capital formation upon which much business and personal lending is based, and is there for,  a great cog in our country’s economic engine.

Imagine, lawmakers who have truly done their homework on an issue that is vital to our citizens’ security, and to our economy as a whole; lawmakers whose vision reaches across party lines, and across congressional boundaries.  Show of hands if you’d like to see more lawmakers in Washington, D.C., govern like these guys.  Thought so!

Academic Freedom, Or Retirement Plan Harassment?

It’s probably safe to say that most who get letters from Yale University are eager to receive them.  They are likely to be prospective college students, hoping they’re about to learn they’ve been accepted into this prestigious Ivy League school.  It’s equally safe to say that the 6,000 or so retirement plan administrators who recently got letters from a Yale Law School professor were not only very surprised, but were less than eager once they learned the letters’ contents.

These letters informed plan administrators that their plans were part of a study being conducted by a Yale Law School professor, the focus of which was excessive fees.  Of the three letter versions sent out by Professor Ian Ayres, one version boldly stated that the professor had “identified your plan as a potential high-cost plan,” and that it “ranked worse than X percent of plans.”  The letter went on to say that the professor intended to publicize the results of the study sometime in 2014 by releasing it to such publications as the New York Times and Wall Street Journal, and would “disseminate the results via Twitter with a separate hashtag for your company.”

Not surprising, the letter caused more than a little heartburn among even the most calm and conscientious plan administrators as they attempted to digest its meaning, including why they had received it, what they might have “done wrong” in administering their plan, and what negative fallout might be in their future. 

This plan-level bewilderment was soon transformed into industry-wide consternation, frustration and—justifiably—more than a little anger.   Not because the industry should be immune to scrutiny, whether from participants, regulatory agencies, the media, or even the academic community.  The displeasure generated by Professor Ayres’ letters was due both to flawed methodology in Professor Ayres’ study, and to its undeniably accusatory, inflammatory and intimidating tone.   

As intrusive as Professor Ayres study may seem to some, it would be wrong to suggest that the subject of retirement plan fees is “not his business.”  It is unquestionably in the public interest that retirement plans be properly run, in order that American workers have a chance to enjoy a financially secure retirement.  “Properly run” does include reasonable fees.”  What is not in the public interest is shoddy workmanship in the design and execution of a study whose stated purpose was to shed light on plan fees and whether or not they were reasonable. 

Among the statistical objections to Professor Ayres’ study is the fact that the data used is from 2009.  In the world of retirement plan fees and fee disclosure this is like road testing a long-out-of-production Rambler against a modern computer-regulated, flex-fuel consuming, state-of-the-art automobile.  Times have changed greatly and especially in the retirement plan industry. Fee disclosure and awareness has resulted in many changes in the industry since 2009.  Professor Ayres’ also looked at fees in a superficial manner, not taking into account the natural economies of scale created by larger plans having more participants, or plans with higher average balances.  Nor did the study weigh the fees charged against the menu of services provided to a plan.  Employee education, participant-tailored investment advice, and other services that are in some contractual arrangements—but not in others—can and do have a large impact on plan fees, many of which are justifiable and reasonable in light of the services received.

Yale Law School was contacted by industry representatives deeply concerned over the flaws in Professor Ayres’ study, and the damage that could be done to individual plans, their administrators and the plan participants, as well the image of the retirement industry as a whole.  Unfortunately, the Law School administration gave what some might characterize as a political response.  It stated that the letters sent by Professor Ayres did not represent the views of either Yale University of Yale Law School, but because Yale faculty “possess academic freedom to pursue their own research,” the institution “cannot either endorse or repudiate [his] research.” 

If Yale cannot—or will not—openly repudiate or question Professor Ayres’ research, perhaps somewhere between the lines of the university’s response one can hope that that it will convey to him the message that the quality and accuracy of his final product is likely to be scrutinized with a fine-tooth comb.  Yale itself does have a reputational stake in the outcome.

It might also be prudent for Professor Ayres to consider the fact that academic freedom granted by an educational institution is not a license to wrongly imply that a plan or a plan administrator is deficient in meeting its fiduciary responsibilities.  It would seem that Professor Ayres may be the party acting “unreasonably” in this case.  

EBSA Revenue Sharing Ruling is Helpful, But Questions Remain

Among the myriad investment options that can be made available to retirement plans and their participants, some have underlying fees built into them, such as marketing, distribution or shareholder servicing fees.  Portions of these fees might be paid to a service provider—such as a third party administrator or recordkeeper—for the services they provide both the plan and the investment provider.  In turn, receipt of such “revenue sharing”—as it is called—may enable these firms to charge lower direct fees to the retirement plans they service.

In today’s highly fee-sensitive environment, revenue sharing payments are receiving scrutiny, right along with the commissions and fees received by those who provide investment advice to retirement plan participants, account transaction fees, and any other types of costs that could potentially reduce a participant or beneficiary’s assets.  That is the world we live in, and most advisers and service providers don’t have a problem with reasonable oversight and disclosure of fees and compensation.

Revenue sharing, specifically, has received a great deal of attention lately, from both the Department of Labor (DOL) and the courts.  It is a requirement to report revenue sharing payments on Schedule C, Service Provider Information, of Form 5500, Annual Return/Report of Employee Benefit Plan, filed with the DOL.  Revenue sharing payments must also be disclosed as part of a service provider satisfying the 408(b)(2) regulations issued by the DOL’s Employee Benefits Security Administration (EBSA).

In early July of this year, EBSA issued Advisory Opinion 2013-03A, in which the agency provided some insight into how it views, at least in part, revenue sharing relationships and payments in the retirement plan environment. 

Adv. Opin. 2013-03A was issued to Principal Life Insurance Company, through its legal representatives.  EBSA was asked whether investment-related revenue sharing payments, such as 12b-1 fees, would be considered plan assets and also when they could be retained by Principal as compensation. Briefly, EBSA advised Principal that facts and circumstances would determine whether revenue sharing payments would be considered plan assets and could be retained as compensation by Principal. 

EBSA indicated that if there are no declarations or contractual terms promising that revenue sharing payments will be used to pay plan expenses, or will be paid to the plan itself, then such revenue payments would not be considered plan assets and could—in this analysis—be retained by Principal.  On the other hand, if—by communication or agreement, formal or otherwise—revenue sharing payments are supposed to benefit the plan by payment of plan expenses, or be paid into the plan, then a plan would have an enforceable claim for such amounts as plan assets, with the usual fiduciary obligations that entails. 
The Adv. Opinion went on to say that beyond any agreements or expectations regarding entitlement to revenue sharing payments, if a service provider were to influence investment selections in order to generate revenue sharing payments for its own benefit, this would be considered a prohibited transaction under ERISA.

This EBSA guidance is helpful and provides the industry with a better understanding of when revenue sharing payments may, or may not, be plan assets, and also how these payments can be used.  We also know that “the rest of the story” likely remains to be written.  There has been a fair amount of discussion within the industry concerning some things NOT found in Adv. Opin. 2013-03A.   Among these is the allocation and use of revenue sharing payments that are—in fact—paid to the plan, rather than being retained by a service provider, and how this should occur.  The complexity in addressing this issue lies in the fact that—in some plans—not all investment options yield revenue sharing payments and participants move in and out of various investments options, thereby individually generating different amounts of revenue sharing.  This raises the question of what these amounts can or should be used to pay for, and also how any “excess” should be used.  Based on the current EBSA guidance, there is no mandated method to follow and plan sponsors and service providers should use a an approach they determine to be reasonable and prudent for the use of and allocation of these amounts.  It would seem that a number of different alternatives would meet this standard until further guidance is provided.  More to come on this issue in the future.

Are Retirement Saving Incentives Incompatible With Tax Reform?

Anyone whose job requires tracking and evaluating legislation, may—sooner or later—consider the benefits of counseling, anti-depressants, or both.  It can be genuinely depressing to witness the developments, or more accurately the lack thereof, on Capitol Hill.  It is depressing on the one hand to witness the lack of cooperation and compromise among senators and representatives whose job it is to govern.  But it is similarly troubling to repeatedly hear from certain sectors that maintaining important Tax Code benefits—like retirement saving incentives—is incompatible with solving our nation’s budget problems, and putting our nation’s fiscal ship on a safe and sustainable course. 

We believe firmly that using tax benefits to encourage people to save for retirement and addressing the federal budget issues are not incompatible goals.   A closer look at the real nature of retirement saving incentives will show how much they differ from some of the other popular “perks” and “tax costs” contained in the Tax Code.  If lawmakers consider just ONE very singular difference, it should be a slam-dunk to maintain retirement saving incentives.  The question is whether lawmakers will take the time to really understand how they differ from other Tax Code incentives, some of which actually do result in lost federal tax revenues.

A close look at this issue is important because the nation seems headed in the direction of tax reform, later if not sooner.  There are multiple tax reform options that have been proposed, most of which—to varying degrees—could significantly restrict or revamp current retirement saving options.  One proposal is to sweep away all tax deductions and exclusions in favor of reduced tax rates, perhaps adding back the most critically important tax incentives.  Another would limit the maximum retirement saving accumulations in combined IRAs and employer plans, while yet another would reduce and cap annual tax deferrals and exclusions.  And there are more, all having the effect of limiting retirement saving tax benefits.

Most of these reform strategies are being proposed under the assumption that workers’ earnings that are deferred or excluded from income each year through retirement saving are lost to the federal revenue stream, and thereby are a “cost” in the grand federal budget-balancing equation.  

This is simply untrue, and a comparison with several other popular—and worthy—Tax Code incentives will demonstrate why.  Consider the universally popular home mortgage interest deduction, which all of us who have purchased a home have benefited from.  By deducting from our taxable income the interest portion of our home mortgage payments, we reduce our tax obligation.  But, in the bargain, the collection of federal tax revenues is reduced, permanently.  Is it a benefit to society to promote home ownership?  Certainly, both for tangible reasons of stimulating the economy, and the intangibles of neighborhood and broader social stability.  But make no mistake, the nation as a whole “pays” for this tax perk.

The same is true of charitable giving, as noble and as beneficial to society as sharing our resources with others may be.  Charitable giving deductions, like the home mortgage interest deduction, reduce taxable income, and thereby permanently reduce the federal tax revenues that such generous taxpayers would otherwise have contributed to the federal tax coffers.  I am not advocating taking away these very beneficial tax incentives that most would say provide a very useful and valuable social benefit but rather using them by way of comparison to the incentives provided for retirement savings. 

Consider, now, the deductions and exclusions for IRA or employer plan saving.  With the exception of Roth-type accounts, every dollar that is given a tax benefit in the year it is contributed to such a plan or account is taxed when it is withdrawn, either during the saver’s retirement years, or by a beneficiary.  Not only are such dollars taxed, but—in being spent by retirees or beneficiaries—they provide dollar-for-dollar stimulus to the economy. 

Furthermore, the assumption of some policy makers that such dollars will be taxed at a lower rate in the withdrawal years is not necessarily sound.  Many taxpayers with substantial retirement savings are NOT in lower taxing brackets after retirement, and beneficiaries—often younger and in their peak earning years—are unlikely to be in the lowest taxing brackets.

So, it cannot logically be argued that retirement saving represents a permanent loss to the nation’s budgetary process.  Therefore, it cannot logically and honestly be argued that tax reform and retirement saving are incompatible.  It is my fervent hope that Congress recognizes this before it throws the retirement saving “baby” out with the tax reform “bath water!”