The Scholar Of Savings

(Dow Jones) Interpreting the Bible and retirement policy typically don't mix.

Unless you are J. Mark Iwry. The son of a Dead Sea Scroll scholar and a descendant of mystical 17th-century rabbi Baal Shem Tov, he also is a uniquely powerful Washington wonk, almost single-handedly guiding the nation's approach to retirement accounts and policy.

Iwry's job, as the Treasury Department's senior benefits official, is to figure out what the government can and can't do to boost retirement savings. He is currently promoting "auto-IRAs," the top retirement item in the Obama administration's budget, which will be introduced to Congress within a few weeks.

Overhauling retirement-plan policies involves interpreting arcane and often ambiguous provisions in the U.S. tax code, then getting employers and lawmakers to go along with proposed changes.

"He's sort of like a biblical scholar," says Norman Stein, professor of law at Drexel University. "He's interested in trying to deal with the technical and policy together, to get the technical to serve the policy."

People on both sides of the political divide cite Iwry's ability to get opposing parties to find common ground. "He's a pro-participant pragmatist," says David Certner, legislative policy director for Washington-based advocacy group AARP, which supports the auto-IRA.

Over the past decade, Iwry (pronounced Ee-vree) has been instrumental in developing legislative and regulatory changes to increase savings, including promoting automatic enrollment in 401(k) plans; letting the IRS deposit tax refunds directly into Individual Retirement Accounts, or IRAs; establishing the saver's credit for lower-income workers; and creating a sort of mini-401(k) for small-business employees, who now have more than three million accounts.

Some retirement experts complain that these kinds of changes are too incremental. "These reforms may increase the proportion of workers in retirement plans but haven't resulted in meaningful accumulations of benefits," says Karen Ferguson, director of the Pension Rights Center, which is seeking more systemic changes

Though Iwry long has been an influential retirement-policy operative, most people outside Washington couldn't pick him out in a line-up. He hasn't been harpooned on the Jon Stewart show, like Peter Orszag, the White House budget director. He hasn't made it to People magazine's 100 Most Beautiful People list, like Rahm Emanuel, the White House chief of staff. Nor has be been a consultant on "The West Wing," like Gene Sperling, counselor to Treasury Secretary Timothy Geithner. Iwry has worked with all three on retirement issues over the years.

The low-key Iwry, 60 years old, is known for nothing more eccentric than a tendency to talk on two phones at once, and a habit of speaking in complete paragraphs, with subordinate clauses and footnotes.

The Harvard Law School graduate first worked at Covington & Burling and became benefits tax counsel at the Treasury during the Clinton administration. Before his current appointment, to the newly formed post of senior adviser to the Treasury secretary, he was of counsel at the law firm Sullivan & Cromwell, and a fellow at the Brookings Institution.

While at Brookings, Iwry began developing the auto-IRA, which would require employers without retirement plans but with more than 10 employees to withhold a portion of each employee's pay-similar to a payroll-tax withholding-and deposit it into an IRA. Employees could opt out.

"This targets nearly half the working population-potentially as many as 78 million people-who have no easy way to save in the workplace," Iwry says.

Iwry's co-author of the auto-IRA was David C. John, a research fellow at the Heritage Foundation. "People would bring Mark and me to conferences and hearings with the idea that we'd provide entertainment by disagreeing with everything the other said," John says. "But we both strongly agree on the goal of increasing coverage."

Another criticism of the auto-IRA and retirement-savings plans is that the tax incentives benefit primarily middle- and upper-income employees who would save anyway. The plans could be useless to savers with little or no taxable income.

What is more, the lower-income workers are more likely to withdraw money before 59 1/2 for emergencies and living expenses, and then owe a 10% tax penalty on the withdrawal. "They might wind up with less after taxes than if they had never contributed at all," says Ms. Ferguson.

To address this, Iwry proposes that the default option be a Roth IRA. Because contributions to Roth IRAs are made with money that has already been taxed, withdrawals aren't taxable. What is more, withdrawals would be treated as contributions first; the 10% penalty would apply only to the earnings.

He also would expand the savers' credit and make it refundable. This means if a person owed no income tax-a group that includes 50 million households-the credit would be contributed as cash to the saver's retirement account.

The changes would increase the annual cost of the savers' credit to roughly $3 billion from $1 billion, though this would still be just 2% of the total $150 billion in retirement-tax expenditures.

Employer groups have been wary. "Our main concern is it will burden small employers," says Aliya Wong, executive director of retirement policy for the U.S. Chamber of Commerce.

For employers, Iwry says, it would be no more complicated than direct deposit of a paycheck and involve no contributions, outlays, or investment decisions.

Iwry-who lives near Washington with his wife, Daryl Lander, a lawyer in solo practice, and his college-bound son-may have a tolerance for complexity in his DNA.

His father, Samuel Iwry, was a Bible scholar in Poland who joined the resistance during World War II, and made his way to Shanghai, where he negotiated with the British to allow Jewish families to emigrate from Asia to Palestine. He married the woman who nursed him back to health after he was imprisoned by the Japanese, and the couple moved to the U.S., where the senior Iwry became a professor at Johns Hopkins University and worked to decode the Dead Sea Scrolls.

For someone who chooses his words as if he is giving a deposition, the younger Iwry has the unlikely distinction, along with humorist Dave Barry, of being among the most quoted in the recently published "As Certain as Death: Quotations About Taxes," by Jeffery L. Yablon, a tax partner in the Washington office of Pillsbury Winthrop Shaw Pittman.

In one, Iwry compares the tax code to the Bible: "Of only one other book can it be said . . . that great minds have devoted countless hours to the scrutiny and learned exegesis of every passage; that differing interpretations of the text have given rise to some of humanity's most epic struggles; and that, while millions mine it for valuable insights and inspiration, those who claim to live by the book and follow its precepts probably far outnumber those who actually do so."