Interest Rates

Because the cap is tied to annuities, it could decline if interest rates rise, according to an analysis by the Employee Benefit Research Institute. Balances of Roth IRAs and the value of defined-benefit plans would count toward the cap, according to a Treasury official who briefed reporters on the condition of anonymity. Contributions are already limited by law.

“In a world where people have not prepared adequately for retirement, increasing taxation of retirement benefits would seem counterintuitive,” White said. “I would be pretty hopeful that message will break through.”

Congress should continue or expand opportunities for retirement savings, Jack Dolan, a spokesman for the American Council of Life Insurers, said in an e-mailed statement.

The proposed cap is “unworkable,” adds confusion to the retirement system and would discourage savings, Investment Company Institute CEO Paul Schott Stevens, whose Washington- based trade group lobbies on behalf of mutual funds, said in an April 10 statement.

Romney IRA

Americans have become increasingly reliant on their savings for retirement. Just 14 percent of workers were covered by defined-benefit, or pension, plans in 2010, compared with 32 percent in 1989, according to the Center for Retirement Research at Boston College. More than half of workers had no workplace retirement plan in 2010, the center’s data show.

Retirement savings gained attention during the presidential campaign last year when Republican nominee Mitt Romney disclosed that his IRA held between $18.1 million and $87.4 million, and at one time the maximum value exceeded $100 million. IRAs are retirement accounts that let people contribute money without paying income taxes up front. The money grows tax-free inside the account, and holders pay taxes at ordinary income rates when they withdraw the funds.

Diverts Attention

In 2011, about 0.1 percent of savers older than 60 had at least $3 million in 401(k) and IRA accounts, EBRI said in a statement. The median balance in 401(k)s for those ages 55 to 64 was $54,000 in 2010, according to an analysis of federal data by the Center for Retirement Research.