WASHINGTON, D.C. – U.S. Senator Angus King (I-Maine) yesterday joined a group of his colleagues to write to the Senate Finance Committee urging its leadership to protect tax incentives for American workers saving for retirement, and reject changes to the tax system that would harm existing incentives. The letter comes as the Senate majority is poised to release tax reform legislation this week.

“Tax reform should be about strengthening the financial security of low-income and middle class Americans, both today and into the future,” the Senators wrote. “Congress needs to do more to improve retirement incentives for the American people, not less.  Dramatically altering incentives for retirement simply to raise short-term revenue to pay for tax cuts for the wealthy is a cynical ploy that will harm hardworking Americans in every state.  We urge you to reject any legislation that would harm the incentives on which Americans rely today to save for their retirement.”

The letter addresses concerns that a Senate tax reform proposal may include changes to the current tax incentives for Americans hoping to save for retirement, specifically by adopting so-called “Rothification,” which would eliminate or limit the amount of pre-tax money that can be contributed to 401(k) accounts.  In the letter, the Senators highlighted research showing that workers at all income levels participating in employer-sponsored retirement plans contribute on average at least $2,700 annually to their accounts.  This amount exceeds the $2,400 limit that reportedly have been considered as a new pre-tax limit for retirement account contributions.

Joining Senator King on the letter are Senators Patrick Leahy (D-V.T.), Kirsten Gillibrand (D-N.Y.), Tammy Baldwin (D-Wisc.), Tammy Duckworth (D-Ill.), Maggie Hassan (D-N.H.), Jeanne Shaheen (D-N.H.), Richard Blumenthal (D-Conn.), Cory Booker (D-N.J.), Tom Udall (D-N.M.), Chris Van Hollen (D-Md.), Chris Murphy (D-Conn.), Ed Markey (D-Mass.), Jack Reed (D-R.I.), Kamala Harris (D-Calif.), and Amy Klobuchar (D-Minn.).

The text of the letter is below and can be read in full HERE.

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November 7, 2017

The Honorable Orrin Hatch, Chairman

The Honorable Ron Wyden, Ranking Member

Senate Committee on Finance

219 Dirksen Senate Office Building

Washington, D.C. 20510

Dear Chairman Hatch and Ranking Member Wyden:

We write to urge you to protect existing tax incentives that promote retirement savings among American workers.  A core component of the American dream is undoubtedly a comfortable and financially stable retirement.  Changes to the existing system, particularly so-called “Rothification,” which would eliminate or drastically limit pre-tax retirement savings incentives, serve to threaten the ability of the middle class to save for retirement.  Such a change is unacceptable.

Employer-sponsored retirement plans are one of the primary vehicles for retirement savings in our country.  According to Pew Charitable Trusts, seventy three percent of eligible workers making between $25,000 and $49,999 participate in an employer-sponsored retirement plan when such a plan is offered, making this a critical benefit for middle-class Americans.  Further research by the Employee Benefit Research Institute found that, regardless of income level, participating workers making $10,000 per year or more contribute an average of at least $2,700 to their accounts.  Eighty percent of households with a retirement account cite the tax benefits of the account as a key incentive in their decision to save.

Tax reform should be about strengthening the financial security of low-income and middle class Americans, both today and into the future.  Congress needs to do more to improve retirement incentives for the American people, not less.  Dramatically altering incentives for retirement simply to raise short-term revenue to pay for tax cuts for the wealthy is a cynical ploy that will harm hardworking Americans in every state.  We urge you to reject any legislation that would harm the incentives on which Americans rely today to save for their retirement.

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