401(k) Tax Cuts Could Go On Chopping Block

Copyright 2008 Euromoney Institutional Investor PLCAll Rights Reserved Defined Contribution & Savings <span id="x_hitDiv1">Plan Alert <br> <br> <span id="x_hitDiv2">June 23, 2008 <br> <br> 261 words <br> <br> <br> 401(k) Tax Cuts Could Go On Chopping Block<br> <br> <p></p> If the next president and Congress insist on repealing the Bush tax cuts to offset new spending initiatives, the 2001 cuts enlarging 401(k) tax relief are going to be most at risk, says Groom Law Group Partner William Sweetnam. These cuts were later made permanent while all the other Bush cuts are due to sunset out of existence at the end of 2010. So looking ahead to 2011 and beyond, the other cuts might be gone and no longer available to be "pay fors" to finance new projects. <p></p> Not all Washington observers are persuaded policy makers in 2009 will let the other Bush tax cuts die. One analyst cites the repeal of the "marriage penalty tax" enacted at the behest of the Bush administration as an example of a tax change lawmakers are unlikely to want to take back. <p></p> But even skeptics agree the budget situation will be so tight there will be an intense search on, no matter who is in power, for ways to find money. By one estimate the budget deficit for the fiscal year starting Oct. 1, 2009 will hit $400 billion--before any new presidential initiatives are figured in. Sweetnam, who aired his views on June 10 at the SPARK Washington conference, thinks there could be another factor which might tempt politicians to cut back on 401(k)--a coming Government Accountability Office report examining whether the 2001 cuts have accomplished what was expected of them, and caused assets in 401(k) accounts to grow. "If it says there hasn't been an increase in coverage since 2001, is that going to leave our 401(k) plans open for plucking to feed pay-go?" Sweetnam asked. <br> <br> July 7, 2008 <br> <br> <div> <div class="x_nshr"> <center></center> <center><a href="http://www.lexis-nexis.com/lncc/about/copyrt.html" target="_new" class="x_pagelinks">Copyright © 2008 LexisNexis, a division of Reed Elsevier Inc. All rights reserved. </a><br> <a href="http://www.lexis-nexis.com/terms/general" target="_new" class="x_pagelinks">Terms and Conditions</a> <a href="http://www.lexis-nexis.com/terms/privacy" target="_new" class="x_pagelinks"> Privacy Policy</a> <br> </center> </div> </div> </span></span>