Financial advisors are worried about the future of retirement savings incentives, reported InvestmentNews in an April 22 article. Congress has put pressure on tax provisions allowing workers to defer tax payments on contributions to retirement savings.

These provisions may be limited or eliminated altogether in an effort to rein in the federal budget deficit. In the context of this debate, tax incentives are being viewed as tax expenditures.

However, in my view, Congress needs to consider several facts.

• Retirement savings incentives are tax deferrals, not exclusions
• Distributions taken in retirement are taxed as ordinary income
• Limiting or capping tax deferrals may affect the willingness of small businesses to offer defined contribution plans

Read the InvestmentNews article, “Advisers worry about future of retirement savings incentives,”  in which financial planners also weigh in on this issue.

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The views and opinions expressed are those of Robert L. Reynolds, President and CEO, Putnam Investments, are subject to change with market conditions, and are not meant as investment advice. Mark Schoeff Jr. and InvestmentNews are not affiliated with Putnam Investments or any affiliate.