Graff, speaking at a retirement solutions forum in New York held by AllianceBernstein, said a negative outcome for the retirement planning industry could result if legislators come to terms on developing a long-term budget.
On the same day, Republicans and Democrats agreed – with frequent friction and sound bytes – to reach a deal on a spending measure.
The retirement planning industry could take a hit if legislators from the two parties eventually come to complete terms on a long-term budget.
Proposals like the one previously circulated by House Ways and Means Committee Chairman Dave Camp (R-MI) could gain traction. The key to Camp’s proposal and others that have been shown interest by the president and Congressional leadership, Graff said, is raising revenues without raising taxes.
“That’s when you start worrying about the significant deductions and exclusions that exist in the code today,” Graff said. “Whether we like it or not, the 401(k) code is a fully owned subsidiary of the federal government, and they can change it whenever they want or agree to. We've got to make sure, as an industry, that they don’t do that.”
Lobbying priorities should focus on educating Congress on how 401(k) and IRA incentives improve retirement readiness for swaths of American workers, Graff said —and not just one group of workers or one industry, as with other tax loopholes.
House and Senate members must understand many of tax liabilities deferred when a participant contributes to a 401(k) or IRA are eventually paid to the government—albeit at a potentially lower rate—when workers start drawing on retirement account dollars later in life. “We have to make sure we’re getting credit for already paying back much of the taxes that are deferred,” Graff said.
Graff also addressed the potential for precedent-setting decisions from Detroit’s troubled pension system and possible federal approval of a request by some of the nation's largest pension systems to slash benefit levels in the face of funding shortfalls approaching 70%.