401(k) Specialist Issue 1 - 2024 - 1

EDITOR'S LETTER
Under Attack
I'LL EXCUSE YOU IF you've been feeling a little defensive lately.
Quite understandable really, seeing as how the workplace retirement plan industry has been
under attack on multiple fronts (and from multiple well-known economists) in recent weeks.
It may seem like they're out to kneecap the 401(k) market, targeting things like the tax preferences
that make defined contribution plans such an attractive and effective employee benefit
and savings resource for employers and employees alike. They're releasing books saying the
" 401(k) experiment has failed. " One of the most powerful lobbying organizations in the country
came out in support of a bill strongly opposed by the American Retirement Association that our
industry's biggest advocate in Washington feels would amount to unfair competition from the
federal government.
Is the sky falling on the private retirement market?
No. But I'm reminded of a line in the Bruce Willis action movie Die Hard, where our risking-hislife-to-save-the-people
hero is asked, " Hey Roy, how you feeling? "
" Pretty f***ing unappreciated, Al. "
That might sum up how a lot of plan advisors, fiduciaries, recordkeepers and TPAs working
their butts off to help Americans save for retirement are feeling these days.
So you have Teresa Ghilarducci's new book " Work, Retire, Repeat, " saying employees are
laboring in a broken U.S. retirement system with simply working longer not a feasible answer.
You have AARP throwing its weighty support behind the " Retirement Savings for Americans Act, "
writing " we are excited to see the potential to cover even more of America's workers through
federal legislation " -a sentence likely sending shivers down the spine of anyone walking the halls
of the ARA offices. A recent MIT working paper found 401(k) savings incentives seriously exacerbate
existing wealth inequality with an institutional design that rewards those who can-and
do-save more for retirement.
But the issue garnering the most recent attention-and rebuttals from other economists
and retirement industry subject matter experts-was the proposal by Andrew Biggs and Alicia
Munnell in a brief from the Center for Retirement Research at Boston College that suggests
repealing the tax exemption for employer-sponsored retirement plans and IRAs and using that
new revenue to address the majority of Social Security's long-term funding gap. Tax incentives to
save in work retirement plans reduce federal tax revenue and don't meaningfully change saving
behavior, Biggs and Munnell contend.
But the plan has plenty of critics, with ARA's Brian Graff calling it a " seriously misguided proposal "
on LinkedIn and PGIM's David Blanchett-also on LinkedIn-writing this:
" If you want to tax the rich to shore up the system, I guess that's fine, but I don't like the idea of
targeting just rich people who are saving for retirement! "
So while some economists, think tanks and lawmakers think the 401(k) system is broken, rather
than allowing all the new improvements in the SECURE Act and SECURE 2.0 a little runway to
take off and start closing the coverage gap, they'd rather throw the baby out with the bathwater.
When you get attacked, the natural response it to get defensive. Fortunately, the workplace
retirement industry has some pretty strong defenders. They will be needed, and 401(k) Specialist
will continue to share their perspectives in support of the 401(k) plan and the tax advantages,
employer matching contributions, high contribution limits and other traits that make the 401(k)
such an effective way to save.
ISSUE 1 2024 | 401kSpecialist.com
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401(k) Specialist Issue 1 - 2024

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