A draft plan by House Ways and Means Committee Chairman Dave Camp to overhaul the federal tax code for the first time in nearly 30 years would crimp retirement savings, according to groups representing financial services companies and major employers.
In a letter to Camp, the coalition of nearly a dozen groups, from the American Bankers Association to SIFMA, said his planned tax on financial institutions would reduce the availability and increase costs of retirement programs. The ERISA Industry Committee, which represents employers, said the plan would shrink retirement incentives and hike complexity for plan sponsors.
The wide-ranging features of the Camp proposal affecting pensions include taxing the gains in the value of employer stock in a plan when lump sum distributions are made. Also, plan holders would be subject to a withdrawal penalty for the first time if they took money out before they were 59 and a half to pay for higher education expenses.
The Camp plan is widely regarded as having no chance of passage. Leaders in both parties of the Senate have said the body will not take up tax reform this year.