The Origins of the Ownership Society How the

As Baby Boomers plan for their retirements, finance their children's educations, and provide for their families' medical expenses, they confront a fundamental reality: America today is a defined contribution society. We save for retirement, health care and educational savings through IRAs,401(k) accounts, 529 programs, FSAs, HRAs, HSAs and other individual accounts which did not exist a generation ago. In its own way, the emergence of these accounts has been a revolution which has, step-by-step, without fanfare, cumulatively transformed tax and social policy in fundamental ways. TheOrigins of the Ownership Society describes the defined contribution revolution, its causes, and implications. For lawyers, the book provides useful insights into the network of individual accounts which are now central features of the U.S. income tax for retirement, medical, and health savings. Forthose concerned about public policy, the book provides useful guidance regarding our options in providing for the retirement of the mass numbers of Baby Boomers, and in preparing young Americans for the medical costs of their older years. The defined contribution format will, for good or for ill, bethe framework governing the Baby Boomers' choices. For everyone else, including the Baby Boomers themselves, the book explains where we are, how and why we got there, and what our options are for the future.

Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law of the Benjamin N. Cardozo School of Law of Yeshiva University. He is a graduate of Yale College, Yale Law School, and the Yale Graduate School.

Foreword	p. xi
Introduction	p. xiii
How Are They Different? The Defined Benefit and Defined Contribution Formats Contrasted as a Matter of Plan Design	p. 1
Why Does It Matter? Allocating Risk and Reward Between Employer and Employee	p. 5
Investment Risk	p. 6
Funding Risk	p. 14
Longevity Risk	p. 15
Qualifications	p. 23
Summary	p. 28
How Did It Happen?	p. 31
The Underlying Decline of the Defined Benefit Plan: Economic and Demographic Factors	p. 33
The Role of ERISA	p. 38
The Creation of the Individual Retirement Account	p. 39
ERISA's Regulatory Burdens on Defined Benefit Plans	p. 42
ERISA's Fiduciary Rules and Participant-Directed Accounts	p. 45
The Ten Percent Limit on Employer Stock	p. 47
Section 401(k)	p. 49
ERTA and TRA86: Expanded Availability of IRAs and the Financial Services Industry	p. 52
Extending the Defined Contribution Paradigm: FSAs, MSAs, Educational Savings Accounts, Section 529, and Roth IRAs	p. 58
Cash Balance, New Comparability, and Age Weighted Plans	p. 71
Public Employee Pensions and Section 457 Plans	p. 78
Health Reimbursement Arrangements	p. 81
Health Savings Accounts	p. 83
The Saver's Tax Credit	p. 84
Proposals	p. 86
Conclusion: The Significance of Enron	p. 91
Why Did It Happen? and Why Social Security Accounts Didn't	p. 93
The Adoption of ERISA and Section 401 (k): Unintended Consequences and Path Dependency	p. 95
Cultural Receptivity	p. 97
International Comparisons	p. 101
Individual Accounts and Family Diversity	p. 105
The Recent Politicization of the Defined Contribution Paradigm	p. 108
Social Security and the Limits of Dominant Paradigms	p. 112
What Does It Mean? Consumption Taxation, Tax Expenditures, and the Future of the Internal Revenue Code	p. 119
Cash Flow Taxation and Individual Accounts	p. 119
Tax Expenditures and Individual Accounts	p. 126
Individual Accounts and the Likely Futures of the Code	p. 127
Individual Accounts and Fundamental Reform	p. 129
The Engler "Hybrid" Consumption Tax	p. 130
The Graetz Proposal: A High Income Tax Coupled with a Value Added Tax (VAT)	p. 132
Accretionist Taxation	p. 134
ANational Value Added Tax (VAT)	p. 135
Conclusion: Individual Accounts and Tax Complexity	p. 135
What Is The Future of the Defined Contribution Paradigm?	p. 137
The Defined Contribution Paradigm and the Private Sector	p. 137
The Defined Contribution Paradigm and the Public Sector	p. 139
The Partisan Divide: Promoting HSAs	p. 140
The Future (or Lack Thereof) of Money Purchase Pensions	p. 142
The Paradoxical Future of Pension-Based Redistribution	p. 143
Conclusion: The Permanent Eclipse of the Defined Benefit Pension Plan	p. 145
What Should We Do?	p. 147
Clarifying Premises	p. 147
The Program	p. 152
Do No Harm	p. 152
Amend Section 401(k) to Require Elections Out	p. 155
Reduce Scheduled Social Security Benefit Levels	p. 157
Expand the Coverage of the Section 25B Credit and Make the Credit Refundable	p. 159
Apply the Ten Percent Limit on Employer Stock to Defined Contribution Plans	p. 160
Conclusion	p. 161
Index	p. 165
Table of Contents provided by Ingram. All Rights Reserved.

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The Origins of the Ownership Society How the Defined Contribution Paradigm Changed America

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