Transcript: White House official on the $3 million cap on tax deferrals for retirement savings proposed in the FY2014 budget

Edited by Jenny Jiang
Partial transcript of remarks by a White House official on the $3 million cap on tax exemptions for retirement savings proposed in the FY2014 budget. The press briefing was held on April 10, 2013.

…How you want the $3 million cap on 401(k) to work? Do you see the threshold adjusting every year? Do you want money above $3 million to be segregated into another account? What happens to that?

Gene Sperling, Director of the White House National Economic Council:
The IRAs – obviously our entire rationale as a country for giving tax incentives to retirement was to overcome myopia – make sure people invest more so they don’t under-save for the future. That’s good for them. It also makes sure the rest of us don’t have to pay – have more government spending that is needed.

There isn’t a lot of justification, if any, for why you would be giving those tax incentives for somebody who was able to account for over $3 million in an IRA, where most people are putting in a few thousand a year. So what the budget does is it says that once you have an amount sufficient to finance an annuity of $205,000 a year that anything above that you should not get a deferral of taxes on, you should not get tax exempt treatment on. And right now at 2013, that amount comes to $3 million.

When you think of things that we ought to do at a time we’re asking for some tough choices across-the-board, this should be in the heavily no brainer category that anything above $3 million does not require tax deferral or tax exempt contribution.


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