Recently, President Obama proposed limiting the amount that could be saved in a tax-advantaged retirement account.  The proposed cap, based on an annuity of $205,000 per year for a “comfortable” retirement, taking into consideration inflation and interest rates, is calculated to be $3 million for someone 65 years old retiring in 2013.  Balances would be reviewed each year and if contributions pushed the balance over the cap, participants would be required to remove any excess and be subject to their standard tax rate.  This proposal estimates that it would raise taxes by $9 billion over ten years.
What do you think of the President’s proposal?  Is his projection of $205,000 per year really enough for a comfortable retirement?  How would a cap affect the participant’s retirement security?  What happens if the limit is imposed and just a few years before a participant’s retirement the market takes a dive?