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Library | Item Barcode | Call Number | Material Type | Item Category 1 | Status |
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Searching... | 30000010201225 | KF3649 Z45 2007 | Open Access Book | Book | Searching... |
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Summary
Summary
As Baby Boomers plan for their retirements, finance their children's educations, and provide for their families' medical expenses, they confront a fundamental reality: America today is a defined contribution society. We save for retirement, health care and educational savings through IRAs, 401(k) accounts, 529 programs, FSAs, HRAs, HSAs and other individual accounts which did not exist a generation ago. In its own way, the emergence of these accounts has been a revolution which has, step-by-step, without fanfare, cumulatively transformed tax and social policy in fundamental ways. The Origins of the Ownership Society describes the defined contribution revolution, its causes, and implications. For lawyers, the book provides useful insights into the network of individual accounts which are now central features of the U.S. income tax for retirement, medical, and health savings. For those concerned about public policy, the book provides useful guidance regarding our options in providing for the retirement of the mass numbers of Baby Boomers, and in preparing young Americans for the medical costs of their older years. The defined contribution format will, for good or for ill, be the framework governing the Baby Boomers' choices. For everyone else, including the Baby Boomers themselves, the book explains where we are, how and why we got there, and what our options are for the future.
Author Notes
Edward A. Zelinsky, The Morris and Annie Trachman Professor of Law, Benjamin N. Cordozo School of Law, Yeshiva University
Table of Contents
Foreword | p. xi |
Introduction | p. xiii |
Chapter 1 How Are They Different? The Defined Benefit and Defined Contribution Formats Contrasted As A Matter of Plan Design | p. 1 |
Chapter 2 Why Does It Matter? Allocating Risk and Reward Between Employer and Employee | p. 5 |
A Investment Risk | p. 6 |
B Funding Risk | p. 14 |
C Longevity Risk | p. 15 |
D Qualifications | p. 23 |
E Summary | p. 28 |
Chapter 3 How Did It Happen? | p. 31 |
A The Underlying Decline of the Defined Benefit Plan: Economic and Demographic Factors | p. 33 |
B The Role of ERISA | p. 38 |
i The Creation of the Individual Retirement Account | p. 39 |
ii ERISA's Regulatory Burdens on Defined Benefit Plans | p. 42 |
iii ERISA's Fiduciary Rules and Participant-Directed Accounts | p. 45 |
iv The Ten Percent Limit on Employer Stock | p. 47 |
C Section 401(k) | p. 49 |
D ERTA and TRA86: Expanded Availability of IRAs and the Financial Services Industry | p. 52 |
E Extending the Defined Contribution Paradigm: FSAs, MSAs, Educational Savings Accounts, Section 529, and Roth IRAs | p. 58 |
F Cash Balance, New Comparability, and Age Weighted Plans | p. 71 |
G Public Employee Pensions and Section 457 Plans | p. 78 |
H Health Reimbursement Arrangements | p. 81 |
I Health Savings Accounts | p. 83 |
J The Saver's Tax Credit | p. 84 |
K Proposals | p. 86 |
L Conclusion: The Significance of Enron | p. 91 |
Chapter 4 Why Did It Happen? And Why Social Security Accounts Didn't | p. 93 |
A The Adoption of ERISA and Section 401(k): Unintended Consequences and Path Dependency | p. 95 |
B Cultural Receptivity | p. 97 |
C International Comparisons | p. 101 |
D Individual Accounts and Family Diversity | p. 105 |
E The Recent Politicization of the Defined Contribution Paradigm | p. 108 |
F Social Security and the Limits of Dominant Paradigms | p. 112 |
Chapter 5 What Does It Mean? Consumption Taxation, Tax Expenditures, and the Future of the Internal Revenue Code | p. 119 |
A Cash Flow Taxation and Individual Accounts | p. 119 |
B Tax Expenditures and Individual Accounts | p. 126 |
C Individual Accounts and the Likely Futures of the Code | p. 127 |
D Individual Accounts and Fundamental Reform | p. 129 |
i The Engler "Hybrid" Consumption Tax | p. 130 |
ii The Graetz Proposal: A High Income Tax Coupled with a Value Added Tax (VAT) | p. 132 |
iii Accretionist Taxation | p. 134 |
iv A National Value Added Tax (VAT) | p. 135 |
E Conclusion: Individual Accounts and Tax Complexity | p. 135 |
Chapter 6 What Is the Future of the Defined Contribution Paradigm? | p. 137 |
A The Defined Contribution Paradigm and the Private Sector | p. 137 |
B The Defined Contribution Paradigm and the Public Sector | p. 139 |
C The Partisan Divide: Promoting HSAs | p. 140 |
D The Future (or Lack Thereof) of Money Purchase Pensions | p. 142 |
E The Paradoxical Future of Pension-Based Redistribution | p. 143 |
F Conclusion: The Permanent Eclipse of the Defined Benefit Pension Plan | p. 145 |
Chapter 7 What Should We Do? | p. 147 |
A Clarifying Premises | p. 147 |
B The Program | p. 152 |
i Do No Harm | p. 152 |
ii Amend Section 401(k) to Require Elections Out | p. 155 |
iii Reduce Scheduled Social Security Benefit Levels | p. 157 |
iv Expand the Coverage of the Section 25B Credit and Make the Credit Refundable | p. 159 |
v Apply the Ten Percent Limit on Employer Stock to Defined Contribution Plans | p. 160 |
C Conclusion | p. 161 |
Index | p. 165 |