* With 'fiscal cliff' imminent, tax benefits are a concern
* Groups use Twitter and Facebook
By Jessica Toonkel
NEW YORK, Nov 26 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
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
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
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 Nov. 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
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
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
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
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.