Sanders proposes curbing tax break for executive retirement perk

Sanders proposes curbing tax break for executive retirement perk
Presidential candidate to introduce measure that stops execs from delaying paying taxes on stock options and deferred compensation
FEB 27, 2020
By  Bloomberg

Sen. Bernie Sanders is proposing to hike taxes on executive retirement plans and using the extra revenue to aid struggling worker pension plans.

Mr. Sanders, who is seeking the Democratic presidential nomination, plans to introduce a bill in the Senate Thursday that would stop company leaders and other highly paid executives from delaying taxes on stock options and deferred compensation that aren’t available to average employees. The tax would take effect when the compensation is vested rather than when money is distributed.

“It is no secret that the country’s wealthiest CEOs live by different rules than the other 99%,” the independent senator from Vermont said in a statement. “While most workers can only contribute and get preferential tax treatment on up to $19,500 a year in a 401(k) account, the most highly-paid executives in CEO plans are able to contribute an unlimited amount in tax-advantaged plans.”

The bill, co-sponsored by Maryland Democrat Chris Van Hollen, has almost no chance of getting traction in the Republican-controlled Senate this year, but it reflects one of the central arguments Mr. Sanders is making in his presidential campaign: that the tax code favors the wealthy at the expense of workers.

The proposal was reported earlier by Dow Jones.

Mr. Sanders said the bill aims to curb the tax perks for the $13 billion that the 2,300 highest paid executives have in these accounts, according to figures from the Government Accountability Office. The legislation would also require executives to report more information about these accounts to the Internal Revenue Service.

The average account size is $14 million, but some CEOs have more than $200 million, according to the GAO.

Mr. Sanders said the change would raise about $15 billion over a decade, which he would direct toward the Pension Benefit Guaranty Corp. to fund struggling multi-employer pension plans.

That total is a relatively small sum compared to tax plans Democratic presidential candidates are discussing that total well into the trillions. However, the idea could give Mr. Sanders a boost as he aims to campaign in states like Michigan, Pennsylvania and Ohio with large numbers of voters who have pension plans or are getting benefits.

Latest News

Maryland bars advisor over charging excessive fees to clients
Maryland bars advisor over charging excessive fees to clients

Blue Anchor Capital Management and Pickett also purchased “highly aggressive and volatile” securities, according to the order.

Wave of SEC appointments signals regulatory shift with implications for financial advisors
Wave of SEC appointments signals regulatory shift with implications for financial advisors

Reshuffle provides strong indication of where the regulator's priorities now lie.

US insurers want to take a larger slice of the retirement market through the RIA channel
US insurers want to take a larger slice of the retirement market through the RIA channel

Goldman Sachs Asset Management report reveals sharpened focus on annuities.

Why DA Davidson's wealth vice chairman still follows his dad's investment advice
Why DA Davidson's wealth vice chairman still follows his dad's investment advice

Ahead of Father's Day, InvestmentNews speaks with Andrew Crowell.

401(k) participants seek advice, but few turn to financial advisors
401(k) participants seek advice, but few turn to financial advisors

Cerulli research finds nearly two-thirds of active retirement plan participants are unadvised, opening a potential engagement opportunity.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today’s choppy market waters, says Myles Lambert, Brighthouse Financial.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave