The president’s proposal would limit returns in retirement accounts to $205,000 per year, which right now translates into about a $3 million account. Depending on interest rates, the allowed account size could vary and be as low as $2.2 million, the  Employee Benefits Research Institute estimates.

A $3 million cap would affect 0.03 percent of the about 20.6 million IRA accounts that existed at the end of 2011, EBRI says. It would affect 0.06 percent of total account holders, since some holders have more than one account. The limit would hit 0.0041 percent of 401(k) accounts.

The Investment Company Institute also came out against the proposed limit.

“The proposal to place a dollar cap on individual retirement saving accounts would add complexity and confusion to our nation’s system for retirement savings,” says ICI president and CEO Paul Schott Stevens.

“This unworkable proposal to cap individuals’ savings in 401(k)s, other defined contribution plans, and individual retirement accounts would discourage employers from creating retirement plans and workers from contributing,” he adds. “We urge policymakers to fix our budget and debt problems without weakening savings and retirement security.”

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