On April 10, 2013, the White House released its Fiscal Year 2014 Budget (the Budget), which includes a number of proposals related to employee benefit plans. Although it is unlikely that all of the proposals will ultimately become law, it is possible that one or more of them could be included in future legislation as a revenue raiser or otherwise, or as part of an overall tax reform package. This Legal Alert describes the employee benefits-related items in the Budget.
Plan Accumulation Limit. The Budget would limit an individual’s total individual retirement account (IRA) and qualified retirement plan benefits to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013. The proposal covers both defined contribution and defined benefit accumulations. Once an individual’s benefit exceeds the limit, no additional contributions or accruals are permitted. However, if the benefit subsequently becomes less than the limit (e.g., through poor investment performance in a defined contribution plan), the individual could make additional contributions and receive additional accruals until the limit is again reached.
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