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.