Employee Benefit Research Institute (EBRI)
Press Release April 10, 2013 #1017
FY 2014 Obama Budget Proposal:
The Impact of a Retirement Savings Account Cap
[full-text, 5 pages]
WASHINGTON—This week President Obama is expected to unveil his 2014 budget proposal–
and published reports indicate it will include a cap on retirement savings.
In statements released ahead of its official publication, the White House has noted that the
budget will include a new proposal that prohibits individuals from accumulating over $3 million
in Individual Retirement Accounts (IRAs) and other tax-preferred retirement accounts, such as
401(k) plans. How many individuals might be affected by that cap?
In the EBRI IRA database at year-end 2011, approximately 0.03 percent of the approximately
20.6 million accounts had more than $3 million in assets. About 0.06 percent of the total account
holders (some individuals own more than one account), and about 0.11 percent of account
holders who are age 60 or older surpass the threshold. As shown in Figure 1, of the individuals
with IRA balances above $3 million, 37 percent were age 70 or older and another 20 percent
were age 65–69 (50 percent and 26 percent, respectively, for those with known ages in the
Some employment-based retirement accounts, such as 401(k) plans, would be affected as well.
An analysis based on the projected year-end 2012 account balances on all participants in the
EBRI/ICI 401(k) database with account balances at year-end 2011 and contributions in that year
finds that approximately 0.0041 percent of those 401(k) accounts had $3 million or more in
assets by year end 2012.
Impact on Multiple Accounts
Individual savers increasingly find themselves having not only a 401(k), but an IRA as well, and
in many cases multiple savings accounts. Taking into account combined IRA and 401(k)
balances, a review of the integrated EBRI IRA/401(k) database as of year-end 2011 for
individuals age 60 or older who had at least one IRA or 401(k) in 2010 and at least one IRA or
401(k) in 2011 finds that about 0.107 percent of these individuals had balances totaling
$3 million or above.
It should be noted that these numbers are at a particular point in time, based on the most current
data available. Those balances will change over time, and inflation is expected to increase the
level of the cap. The Employee Benefit Research Institute’s Retirement Security Projection
Model (RSPM) allows us to estimate what the potential future impact could be, particularly for
younger workers not currently on the cusp of retirement.