Lawmakers discuss tweaking the tax rules for contributing to retirement funds.
James Buchen of Wisconsin Manufacturers and Commerce says his group supports the intent of the bill (AB-648) regarding converting a traditional IRA account to a Roth IRA. It’s good for economic development. But Buchen says, it doesn’t go far enough when considering 401k and IRA contribution limits.
“To the extent that our limits for what can be contributed to those are different than what the other states have it just, again, makes Wisconsin look hostile I guess to retirees, or, you know, virtually every taxpayer who is trying to save for their retirement.”
Wisconsin will revert to the old limits from 2001, limiting taxpayers to contribute $2,000 to an IRA and $7,500 to a 401k (rather than the current $5,000 and $16,500) without being taxed and penalized. Wisconsin is the only state in the country whose IRA and 401K limits do not conform to federal law.
Mark Miehe is President-elect of the National Association of Insurance and Financial Advisors in Wisconsin. He says the simplest way to address this issue without drafting new legislation would be to adopt the federal guidelines of these retirement tax laws, something he strongly encourages the committee to do.
“It’s good public policy for the state to use its taxing authority to encourage our residents to do as much as possible in each of their own unique financial situations to save for their own retirement. The more our citizens are allowed to focus on achieving this important financial goal, the less they’ll have to depend on government programs to support them.”
Miehe says reverting back to the old law would negatively affect about 95% of the citizens.
Mike Semmann of the Wisconsin Bankers Association testified in support of the bill.
State Representative Louis Molepske (D- Stevens Point) is co-sponsor of the measure. He worries a stronger bill wouldn’t make it to the governor’s desk due to its fiscal impact on the state.
Senator Glenn Grothman (R-West Bend) warns Wisconsin will be put further into a business-unfriendly position. Grothman, along with Representative Pat Strachota (R-West Bend), has already introduced legislation to change Wisconsin’s IRA and 401K limits to match federal law.
Jackie Johnson 1:55