Americans Strongly Oppose Changes to 401(k) Tax Benefits, New Study Finds

A vast majority of Americans stand firmly against any changes to the tax benefits associated with 401(k) plans, according to new research from the Investment Company Institute (ICI). The study, American Views on Defined Contribution Plan Saving, 2024, highlights overwhelming public support for preserving the existing tax incentives and investment flexibility that 401(k) plans offer.

The findings show that 85% of defined contribution (DC) plan participants cite tax incentives as a crucial factor in their decision to contribute to their retirement accounts. Moreover, 86% of respondents oppose any reduction in the amount they can contribute to their DC plans, while 85% reject the idea of eliminating tax incentives that facilitate long-term retirement savings. Additionally, 92% of 401(k) participants value having control over their investment options, underscoring the importance of maintaining flexibility in retirement planning.

These findings come at a critical time, as policymakers in Congress discuss potential changes to the tax code, which could have significant implications for retirement savers. In response, ICI has launched the “Help U.S. Retire” advocacy campaign, aimed at mobilizing retirement plan participants and encouraging lawmakers to protect the current tax treatment of 401(k)s. The campaign seeks to raise awareness of how potential policy shifts could impact millions of Americans who rely on these plans to secure their financial futures.

ICI President and CEO Eric Pan emphasized the importance of preserving these incentives, stating: “401(k) plans are the backbone of America’s retirement savings system. Any changes that diminish their tax advantages or restrict contribution limits could undermine workers’ ability to build sufficient retirement security.”

The debate over tax policy and retirement savings is expected to remain a focal point in legislative discussions this year. As lawmakers consider modifications to the tax code, the strong public sentiment reflected in ICI’s study may play a crucial role in shaping the future of retirement policy in the United States.

For now, 401(k) savers and advocacy groups alike continue to push for policies that encourage retirement savings rather than hinder them.

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