The American Retirement Association (ARA) has launched a campaign asking workers to tell Congress to “fix” a problem in proposed tax reform that it says would cause small business owners to drop retirement plans.

According to the ARA’s “LeaveRetirementAlone.org” campaign launched Thursday, GOP tax reform will result in many business owners paying a lower tax rate on pass-through income than on retirement plan withdrawals. The House bill includes a 25 percent rate for pass-through income and the Senate version results in a rate below 30 percent. Small business owners in high brackets with pass-through income would pay less tax by not making tax-deferred retirement plan contributions because plan withdrawals are taxed at ordinary rates, the ARA says.

Taking income now instead of deferring it in a retirement plan could create an 8 percent tax savings for many small business owners because of the way the tax bills were “inadvertently structured,” ARA’s Nevin A. Adams told Financial Advisor magazine. An 8 percent tax savings is a persuasive incentive to drop a retirement plan, he added.

While the ARA supports the lower tax rate for pass-throughs, it wants small business owners to be able to take the tax deduction for their retirement contributions against income that will still be taxed at higher, regular income rates, Adams said.

GOP leadership in both the House and Senate have said they are pushing to have tax legislation to President Trump’s to sign before Christmas.

To reach lawmakers in time, the ARA is blasting out the “Leave Retirement Alone” campaign over social media and through its 22,000 pension professionals and actuaries who help small businesses create retirement plans, Adams said.  Currently, more than 90 percent of small businesses are organized as pass-through entities. More than 320,000 of these businesses sponsor retirement plans.

The message employees who click on the “LeaveRetirementAlone.org” site send to lawmakers is pointed:

 “Twenty-four million workers could lose their retirement if the "pass-through" tax rate proposal in tax reform legislation is not fixed.  While I support reducing taxes on pass-through businesses, an unintended consequence undermines the tax incentives to small business owners to continue offering a retirement plan to their employees,” the ARA letter to lawmakers states.

“The pass-through tax rate on business income is so much lower than the tax rate on retirement distributions that it simply does not make economic sense to defer income into a retirement plan. The fix simply involves matching the tax rate on retirement contributions with retirement distributions. This is how the tax incentives for retirement work today to build a successful private retirement system. Please ask the Conferees to fix this problem before millions of American workers realize their retirement is at serious risk,” the “LeaveRetirementAlone.org” letter to lawmakers reads.