With the sequester gripping Washington, D.C., all kinds of tax reforms are on the table. Recent FY2014 budget proposals by President Obama include a major change for retirement savers: A new $3 million limit would apply to assets in qualified retirement plans such as 401(k)plans, as well as defined-benefit pensions and IRAs.
Assets in excess of the cap would lose tax-preferred status.
Details of how this would work haven’t been released, but the Obama administration projects that the cap would bring in $9 billion in additional revenue over the next decade.
TheResearch Institute estimates that only 0.03% of current retirement funds exceed $3 million.
Outlook: 50/50. Expect congressional committee hearings, but with so many moving parts in the federal budget process, the retirement cap might not make it into legislation.