Thursday, November 30, 2017

PlanSponsor: Social Security Reduces Maximum Taxable Wage for 2018

Social Security Reduces Maximum Taxable Wage for 2018

The Internal Revenue Service uses the Social Security Administration’s taxable maximum to determine the taxable wage base for permitted disparity in defined contribution (DC) plan contributions.

By Rebecca Moore

The Social Security Administration has reduced the maximum amount of earnings subject to Social Security tax for 2018 to $128,400 from $128,700.

The agency said the lower taxable maximum amount is due to corrected W-2s provided to Social Security in late October by a national payroll service provider.

The Internal Revenue Service uses the Social Security Administration’s taxable maximum to determine the taxable wage base for permitted disparity in defined contribution (DC) plan contributions. Permitted disparity allows for larger contributions or benefits with respect to compensation in excess of the Social Security wage base.

The IRS issued Revenue Ruling 2017-22 November 14, which set the taxable wage base at $128,700. It is expected this will be amended following the Social Security Administration’s new announcement.

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New article: “Is Working Longer A Good Prescription for All?”

The Center for Retirement Research at Boston College has released a new Issue in Brief:

“Is Working Longer A Good Prescription for All?”

by Geoffrey T. Sanzenbacher and Steven A. Sass

The brief’s key findings are:

  • Working longer is an effective way to boost prospects for a secure retirement, but is it realistic for workers across the socioeconomic (SES) spectrum?
  • The Center examined this question in a series of studies funded by the Alfred P. Sloan Foundation, using education as the measure of SES.
  • Given rising life expectancies, the analysis finds that it is reasonable for lower-SES workers to work somewhat longer.
  • However, it may be harder for them to extend their worklives, as they plan to retire earlier and face narrower job options than their higher-SES counterparts.

This brief is available here.

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Monday, November 27, 2017

Upcoming event: TOMORROW. Savings and Retirement Foundation with Mark Iwry and David John

Join us the morning of
November 28, 2017

For a Lunch Meeting with Guest Speakers:

J. Mark Iwry
Non-Residence Senior Fellow
Brookings Institution

David John

Senior Strategic Policy Advisor
Who will speak about
Automatic Enrollment Emergency Savings Plans

The Tax Foundation
9th Floor
1325 G St. NW
Washington, DC

November 28, 2017
Noon-1:00 p.m.
(Lunch will be provided)

J. Mark Iwry is a Nonresident Senior Fellow in Economic Studies. He also is a Visiting Scholar at the Wharton School of the University of Pennsylvania. He served from 2009 to January 2017 as Senior Advisor to the Secretary of the Treasury and concurrently as Treasury’s Deputy Assistant Secretary for Retirement and Health Policy.  He previously was a co-founder and Principal of the Retirement Security Project (2003-09).  He is an honors graduate of Harvard College and Harvard Law School, and has a Masters in Public Policy from Harvard’s Kennedy School.

David C. John is a senior strategic policy advisor at the AARP Public Policy Institute, where he works on pension and retirement savings issues. He also serves as a deputy director of the Retirement Security Project (RSP) at the Brookings Institution. David is a member of the National Academy of Social Insurance. He holds an ABJ in journalism, an MA in economics, and an MBA in finance—all from the University of Georgia.

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Saturday, November 18, 2017

New paper: “US municipal yields and unfunded state pension liabilities”

U.S. municipal yields and unfunded state pension liabilities
by Zina Lekniῡtė, Roel Beetsma and Eduard Ponds


We present empirical evidence that municipal bond yields are increasing in the pension debt towards U.S. state civil servants. However, positive yield effects of both pension and explicit debt are found only for the period since the start of the crisis, suggesting that the crisis triggered awareness of budgetary sustainability. The marginal yield effect of higher pension debt is smaller than that of higher explicit debt, but still economically meaningful. The effect of higher pension debt seems stronger when using market values of pension assets than actuarial values, suggesting that investors pay more attention to market values.

The full paper is available here.

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Friday, November 17, 2017

Social Security Advisory Board Releases Research Roundtable Summary

Social Security Advisory Board Releases Research Roundtable Summary: Participants' views on a long-range research agenda for the Social Security Administration

Today the Social Security Advisory Board announces the release of a new document: “Research Roundtable Summary: Participants’ views on a long-range research agenda for the Social Security Administration.”

In August 2017, the board held a roundtable discussion in Washington, DC with scholars from around the country who were asked to suggest ideas for a long-range Social Security research agenda and to discuss the data needs they think are required to carry out that agenda. Additional scholars who did not attend the meeting submitted written suggestions. The document being released today summarizes thoughts and recommendations from over 30 individuals who participated in this process. The points made in this report do not necessarily reflect or represent the views of individual board members and are not exhaustive of all the important insights that other researchers and experts may have to offer. Still, they highlight a number of issues the board hopes the public and the Social Security Administration will find useful to consider.

Most participants emphasized the need for additional investments in data infrastructure and greater access to and sharing of the administrative data necessary to address key research questions. Some recommended continuing the development of policy evaluation models and suggested a number of topics that could be addressed through demonstration projects. Among the numerous issues identified, some notable examples include the need to better understand:

  • what factors contribute to the economic security or insecurity of retirees,
  • how changing patterns of work, health, retirement, asset and debt accumulation and decumulation will affect the economic security of today’s workers,
  • how SSA’s communication with the public affects decision-making by workers, claimants and beneficiaries,
  • how disabilities develop, how SSA determines eligibility for benefits and what conditions are necessary for individuals to keep working or to return to work, and
  • the reasons for and implications of recent downward trends in disability applications and awards.

To read the full report click here

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Monday, November 13, 2017

Upcoming event: "What’s Next for Tax and Entitlement Reform”

National Economists Club

Featuring Marc Goldwein of the Committee for a Responsible Federal Budget

Chinatown Garden Restaurant 618 H St NW Washington DC
Date: 16 Nov 2017 12:00 PM

Marc Goldwein

Senior Vice President & Policy Director

Committee for a Responsible Federal Budget

"What’s Next for Tax and Entitlement Reform”

Marc Goldwein is the Senior Vice President and Senior Policy Director for the Committee for a Responsible Federal Budget, where he guides and conducts research on a wide array of topics related to fiscal policy and the federal budget. He is frequently quoted in a number of major media outlets and works regularly with Members of Congress and their staffs on budget-related issues.

In 2010, Marc served as Associate Director of the National Commission on Fiscal Responsibility and Reform (The Fiscal Commission), and in 2011 he was a senior budget analyst on the Joint Select Committee on Deficit Reduction (The Super Committee).  He has also conducted research for the Government Accountability Office, the World Bank, the Historian's Office at the Social Security Administration, and the Institute of Governmental Studies at UC Berkeley. In addition to his work at the Committee, Marc teaches economics at the University of California DC and at Johns Hopkins University, where he was the 2013 recipient of Excellence in Teaching Award. In 2011, Marc was featured in the Forbes "30 Under 30" list for Law & Policy.

Note: Registration is open through Wednesday, 11-8-17. 

Press: Please email with your attendance status and the date of attendance. It will be assumed that lunch is NOT requested.   If lunch is requested, please contact me in advance, prior to the date of the event, for registration and payment instructions.

Credit Card payment is non refundable but you may substitute someone in your place for attendance.

Visit for registration information.

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Thursday, November 9, 2017

Smith: Three Myths About Fixing Social Security

Writing for, Brenton Smith outlines three myths about Social Security’s funding health:

Social Security is the largest, and arguably most important, program in the federal government. It is a life-line for millions. For the rest of us the program is a set of never-ending, polarizing arguments.

The contentiousness is caused in large part by the number and conflicting nature of the urban legends surrounding the system. Everyone has a fact that is someone else’s myth.

These convictions about the program shape who voters elect, and seriously limit what candidates are willing to say to the electorate. These beliefs have so penetrated the public conscience that actual policy makers are left herding unicorns.

Check out the whole article here.

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Saturday, November 4, 2017

CBO Projects Small Improvement in Social Security Financing

The Congressional Budget Office released new projections of Social Security's long-term financial health. While still showing a much larger funding deficit than the figures released by Social Security's Trustees, the CBO shows a small improvement relative to last year's figures. Over 75 years, the CBO projects a shortfall equal to 4.5 percent of employee payroll, versus a 4.7 percent gap in the office's 2016 projections.

Since last year, CBO has made changes to its projections of five key inputs: productivity in the economy, interest rates, the population, the labor force participation rate, and the share of earnings that is subject to Social Security payroll taxes. The changes to the first three of those inputs worsen the Social Security system’s projected finances, whereas the changes to the last two improve them. Moreover, an additional year of deficit—2091—is now included in the calculation of the actuarial balance, which worsens the 75-year outlook.
CBO projects larger deficits in Social Security’s finances than do the Social Security Trustees. That difference is largely explained by CBO’s and the trustees’ different projections of several major inputs into estimates of the system’s finances: earnings subject to the Social Security payroll tax, components of GDP growth, the population, and real interest rates (that is, interest rates adjusted to remove the effects of inflation).
Nevertheless, while the CBO projects a small improvement relative to its 2016 figures, the longer-term trend has been troubling. In the mid-2000s, progressives and Congressional Democrats often cited the CBO's projections in preference to the Trustees' figures, because the CBO showed a smaller deficit and this seemingly weakened the case for reform. Since that time, however, the CBO's projected long-term deficit has more than tripled. Both parties should pay attention to the CBO's projections. If the office proves to be correct, the Social Security shortfall will be far larger than either party's preferred policy changes could tackle.

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