The head of AIG sent employees a memo urging them to oppose the Congressional 401(k) cap
The leadership of global insurance group AIG sent all US employees an email urging them to contact their local representatives to oppose a Congressional plan to limit 401(k) contributions, according to a screenshot obtained by Quartz.
AIG also joined the “Save Our Savings” coalition, which includes consumer advocacy group AARP, human resources consulting firm Mercer, financial services providers T. Rowe Price, and Capital Group, among others.
In the emailed memo, the company outlined its opposition to part of a tax overhaul proposed by congressional Republicans, which would cap contributions to tax-deferred retirement accounts—to as little as $2,400, from the current $18,000 for people under 50—and push the rest into “Roth” accounts, where taxes are paid at the time a deposit is made. Critics of the proposal say that if these kinds of deductions were not tax-deductible, it would be difficult for many people to put away money for retirement.
AIG’s leadership, including CEO Brian Duperrault and heads of the company’s retirement services, wrote that they are “troubled” by the proposal, which would affect customers and employees. “Over 75 million Americans—nearly a quarter of the US population—actively participate in traditional, defined contribution retirement plans,” the memo reads. “Changes affecting that many people should be made for sound policy reasons that help them save more, not less.”
A spokesperson for AIG confirmed the text of the memo, but declined additional comment. The company says that it provides nearly 3 million people with retirement services, and describes itself as a leader in providing retirement plans for the government, as well as healthcare, education, and other nonprofit industries.
The financial services industry overall has come out strongly against the plan to cut 401(k) contributions; such retirement accounts have sent trillions of dollars into various financial assets in recent decades, Bloomberg reported.
Last week, Donald Trump tweeted that there would be no change to 401(k)s, but statements from members of Congress indicate that the changes are still very much on the table. As The New York Times notes, the 401(k) proposal is an attempt to finance corporate tax cuts (paywall).
Here is the full text of the memo:
Almost 3 million people — including educators, firefighters, police, and healthcare professionals — rely on our Group and Individual Retirement businesses to help them plan and save for their futures.
We not only help people protect their loved ones, we also enable people to live the life they envision. So we are troubled by a proposal the U.S. Congress is considering as part of a comprehensive tax overhaul that would limit pre-tax retirement contributions, in favor of post-tax, or “Roth,” contributions.
This means that our customers and you, our employees, would start paying income taxes upfront on retirement plan contributions, including those in 401(k) and 403(b) plans. It would immediately reduce take-home pay and could lead to a drop in contribution levels at a time when people are living longer and finding it harder to secure reliable sources of retirement income.
Tax incentives that encourage personal savings are exactly the type of incentives that we should keep — not eliminate or limit. To educate Congress about the dangers of limiting pre-tax retirement contributions, AIG has joined the Save Our Savings Coalition together with financial services providers such as T. Rowe Price and advocates such as AARP.
But we can’t do this alone — we need your help. The proposal is moving quickly and the timeframe to make a difference is very short. We urge you to take action. Please visit the coalition’s website at saveoursavings.org/get-involved to learn more and consider sending a letter to your U.S. Senators and Representative.
Over 75 million Americans — nearly a quarter of the US population — actively participate in traditional, defined contribution retirement plans. Changes affecting that many people should be made for sound policy reasons that help them save more, not less. Please join us in educating Congress on this important issue.