Law, College of


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Published by Medill in Journal of Legislation (2001) 27. Copyright 2001, Notre Dame Law School. Used by permission.


The federal government's single largest tax subsidy today is for a retirement plan system voluntarily sponsored by employers. Rather, these proposals are likely to enhance the benefits of higher income employees who already have retirement plan coverage, reversing the progress that had been made during the late 1980s and early 1990s toward making the pension tax law system more equitable. I propose that Congress should close, or at least narrow, the loopholes in the pension tax law system that reduce the scope of retirement plan coverage and benefits for rank-and-file workers. The proposal for these SAFE (or SMART) defined benefit plans is based on a model advocated by the American Society of Pension Actuaries. The smaller employer who outgrows his eligibility limit of 100 employees, or who has become profitable enough to sponsor another qualified plan, must transition to another set of qualified plan rules. For this reason, raising plan contribution and benefit limits (the traditional approach to pension reform) is unlikely to stimulate demand for retirement plan benefits among low-income workers. They will only serve to increase the distributional inequities in the pension tax law system without expanding the scope of retirement plan coverage.

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