As Congress considers the expiring provisions of the 2017 Tax Cuts and Jobs Act, a new survey finds that Americans like their 401(k) and similar defined contribution accounts and don’t want to lose the tax incentives they have now.
The Investment Company Institute’s study “American Views on Defined Contribution Plan Saving, 2024” reports that almost three-quarters of Americans have favorable impressions of such retirement savings accounts.
“Employer-sponsored DC plans have helped American workers achieve long-term saving goals for decades with favorable features like employer contributions, a strong lineup of investment options that are diversified and cost-effective, and tax-deferred growth,” ICI Senior Director of Retirement and Investor Research Sarah Holden said in a news release. “A vast majority — 85% — of DC plan participants find that the tax treatment of their plans is a big incentive to contribute. It’s important when discussing changes to our retirement system for policymakers to note that current plans are working for millions of Americans. Most Americans, whether they currently have retirement accounts or not, have confidence in DC plans as they are and do not support any changes.”
Noting that Congress is considering the expiring provisions of the 2017 Tax Cuts and Jobs Act, ICI in the release urged policymakers to “protect Americans’ ability to save for their futures by ensuring the tax treatment Americans rely on for retirement savings isn’t used as a ‘pay-for’ to finance other government spending or tax changes.”
A “strong majority” of Americans were critical of proposals to end or reduce tax incentives for retirement savings, according to the release. Last fall, 85% expressed opposition to the government ending the tax advantages of DC accounts, and 86% opposed reducing the amount that individuals can contribute to DC accounts. The opposition was higher among those with retirement accounts.
ICI has launched “Help U.S. Retire,” a campaign to “protect the retirement funds that middle-class Americans rely on to build their long-term financial security.” The campaign is intended to mobilize the 120 million American investors who use mutual funds and ETFs and build a grassroots network to sway Congress on the issue.
An “overwhelming majority” of survey respondents agreed that their DC plan helps them think about the long-term and makes it easier to save, according to the study. Almost half said that without their plan they probably wouldn’t be saving for retirement
It’s important to have choice in and control of the investments in a DC plan, 92% of DC-owning individuals said. And 83% said their DC plan offered a good selection of investment options.
In the general population, 86% opposed the idea of not allowing individuals to make investment decisions in their DC accounts, and 77% disagreed with investing all retirement accounts in an investment option selected by a government-appointed board of experts.
