Federal Regulation of Retirement Plans: The Quest for Parity

An analysis of the regulatory scheme behind the varied treatment of retirement plans reveals that many of the distinctions made are not justifiable. For example, an incorporated, one-man law firm with net income of $125,000 can make a deductible contribution to a money-purchase pension plan of $25,000. If the lawyer conducted his practice as a sole proprietorship, however, his annual deductible contribution would be limited to $7,500. The form in which the lawyer conducts his business determines the tax burden that he must assume in providing for his retirement.

Thus, retirement parity remains unachieved, even after a comprehenisve revision of the regulatory system. It is the purpose of this article to review the historical development of the federal regulation of retirement plans, to analyze and evaluate the current regulatory scheme, and to suggest appropriate changes in the quest for parity.