Current taxation of qualified pension plans: has the time come?
Such a one-time assessment would not only ease the transition by allowing the new tax rules to apply immediately to all benefits, it would also eliminate a peculiarity of the current system whereby the government is essentially prefunding its future tax receipts. That is, current pension plans really consist of two separate funds: one fund that accumulates assets to pay future net-of-tax pension benefits, and another fund that accumulates assets to pay future federal income taxes. The government, like the private sector, implicitly employs the services of plan sponsors and investment advisors to manage and invest the assets in its portion of the pension fund. The government has no need to prefund its tax receipts, and would lose nothing by discontinuing this practice.
Related Questions
- There has been discussion that the contractor will have to close South Oxford at North Decatur for a period of time. What are the plans to deal with traffic circulation during this phase?
- Are lump sum and eligible rollovers from qualified pension and annuity plans subject to withholding?
- Does Massachusetts follow the Internal Revenue Code for the treatment of qualified pension plans?
