- IRS official refuses to answer questions at scandal hearing |
- Global stocks, oil fall after Bernanke; dollar gains |
- Oklahoma tornado victims astounded at how they survived |
- CORRECTED-White House threatens veto of bill to bypass Obama on Keystone
- FBI says man shot dead while being questioned about Boston bombings
Trade groups hit airwaves to protect tax benefits
NEW YORK |
NEW YORK (Reuters) - As the debate around tax reform grows more heated, broker-dealers and other companies that service retirement plans offered by employers are increasingly concerned that the tax benefits of 401(k) plans are on the chopping block.
Groups representing the spectrum of financial services have begun marketing campaigns online as well as on television protect their members' interests and bring investors to their side.
An industry group that normally works behind the scenes, the American Society of Pension Professionals and Actuaries, on Monday began an advertising campaign aimed at U.S. workers to let them know the federal government might lower the cap on how much they could contribute to their retirement plans on a tax deferred basis.
That worries ASPPA because Americans might end up saving less, and some smaller employers might eventually decide to discontinue their own 401(k) plans.
The "Save My 401(k)" campaign includes a website, Facebook page, Twitter feed, and an online videogame. ASPPA's Chief Executive Brian Graff declined to disclose the ad campaign's budget, but did say it was in the six figures.
The ad campaign's goal is to raise awareness among employers and employees that they may be in danger of losing some of the tax breaks surrounding their 401(k) plans, Graff said.
But efforts by ASPPA and others may backfire if people view the campaigns as an extension of the negative advertising campaign that took place in the months leading up to the presidential election on November 6
Roberto Rigobon, a professor at MIT's Sloan School of Business said investors may the advertisements "more as polarized political discussion than feel roused to call their senators."
The possible year-end expiration of a host of tax provisions has industry trade groups trying to protect their interests and maintain the advantages their products or services have. Full-scale tax reform could cut or limit specific tax breaks as a way of lowering overall tax rates.
"The last time Congress made major changes to the tax code, there was a drop in 401(k) contributions by more than 70 percent," Graff said in a phone interview.
For nearly every proposed tax change, there appears to be an ad campaign targeted at investors being urged to write their congressional representatives.
Life insurance benefits are not taxed at the moment and the Americans to Protect Family Security, a consortium of insurance industry groups, wants to keep it that way.
This month the Americans to Protect Family Security, which includes the American Council of Life Insurers (ACLI), a trade group made up of 300 insurance companies, began promoting the importance of life insurance products for U.S. families. The ads, including television spots during the Sunday morning news programs "Meet the Press" and "Face the Nation," as well as online ads, focus on how life insurance helps families.
Jack Dolan, a spokesman for ACLI, said now is the time to get a message across via television and the Internet. "This is a critical time and it is also a time when people are paying attention," said Dolan, adding that 75 million families have life insurance.
Similarly, The Alliance for Savings and Investment (ASI), a coalition of dividend-paying companies, investor organizations and trade associations, along with the Edison Electric Institute and the American Gas Association, have begun the "Defend My Dividend" advertising campaign. ASI's efforts also include print ads that advocate maintaining the lower tax rate for dividend income.
Dividends are currently taxed at 15 percent, but that rate is set to expire at the end of the year. Dividends could then be taxed at a rate as high as 39.6 percent if an extension is not made or a compromise not reached.
As for ASPPA's concerns, investors who save via 401(k) plans do so on a tax-deferred basis, paying no taxes on the money until they withdraw it from the plan.
Through its "Save My 401(k)" campaign, ASPPA members - including brokerage firms such as UBS AG and Bank of America Merrill Lynch - will try to encourage clients to contact their representative and urge them to leave 401(k) plans out of tax reform.
ASPPA has 11,000 member companies, including broker-dealers and record keepers who service the retirement savings plans offered by U.S. employers. The group's goal is to have a total of 250,000 emails sent to members of Congress over the next six months, Graff said.
"We have never done anything close to this scale," he said.
(Editing by Matthew Lewis, Jennifer Merritt and Leslie Gevirtz)
- Tweet this
- Share this
- Digg this