Having reviewed hundreds of publicly-held company Proxy Statements filed with the SEC, I am just amazed at the
dollar amounts of retirement benefits bestowed on highly-paid executives. I already addressed in another post the huge salary
deferral one. And my earlier post on Other Employee Benefits included the huge Postretirement Health Care and Other Retirement Benefits one.
Below here are some huge profit-sharing retirement benefits for highly-paid
employees that should be substantially reduced, which would give a
lower US federal income tax deduction to the employer, and thus higher
Tax Revenues received by the US Government. Further, with this reduction in the annual maximum limits and/or percentage, you also decrease substantially the
amount of the subsequent tax-deferred earnings growth of these
retirement plans. A two-fer, with the end result being that there will be substantially positive CBO scoring of US Debt Reduction.
1) Maximum Annual Contribution for Defined Contribution Plan of $51,000.
2) SEP Compensation Limit of $250,000.
3) 401(k) Maximum Compensation Amount of $255,000
4) No $17,500 annual limit on employer matching contributions
5) Employer deduction for contributions to a defined contribution plan
is the greater of (a) 25% of compensation and (b) the amount the
employer is required to contribute to a SIMPLE 401(k) plan.
Just think how incredibly lucrative the tax loophole is for just #1)
above. The company making the $51,000 profit-sharing contribution in 2013 to
the highly-paid employee gets an immediate tax write off for the
$51,000. And the end result is the highly-paid employee can get up to
$51,000 per year in profit-sharing contributions made to his
tax-deferred account, and this $51,000 maximum limit grows each year.
This highly-paid person works for this company for just 20 years, and
could very easily have more than $2 mil accumulated in his tax-deferred
account at the end of 20 years, which includes the tax-deferred earnings
for 20 years. And after 20 years, he is probably still only in his
40s!
What has happened here is another case of "Tax Deferrals Gone Wild" for the already financially well heeled.
When the country has this $16 trillion of debt, and conservatives in the
US Congress are lusting over substantially reducing Medicare Benefits
and Medicaid Benefits of lower and middle income retirees, and these
same US Congressmen have legislated for the tax-deferred massive US
Government funding to multi-millionaire status for hundreds of
thousands, and perhaps even millions, of these already pretty
well-heeled profit-sharing participants, there is something clearly
wrong with the justice of what has happened here.
These conservative Republicans, and even many Democrats who have voted
the same way, have created a US economic environment where only the
already very well off get much more well off, and everyone else flat out
struggles financially.
This is wrong, and I mean seriously wrong. The country has
totally missed the massive injustice that has happened here with the
many gargantuan employee benefit tax loopholes to the already
well-heeled.
And lower and middle income retired and near retired people have every right to be
outraged with what the US Congress has facilitated here. And now the US
Congress wants to dramatically cut their Medicare and Pension Benefits? Give me a
break!
