Tucked away in President Reagan's latest tax cut plan is a provision to give a major new tax deduction to millions of working Americans by permitting them to establish individual retirement funds even if they are participating in company pension plans.
Nearly 3 million taxpayers are now contribution to their own individual retirement accounts (IRAs) and are entitled to deduct up to $1,500 in contributions from their federal income taxes.
But no such deductions are allowed currently for the 42 million workers whose employers have an approved pension plan or retirement fund. In previous administrations, the Treasury Department reasoned that these employes didn't need individual retirement accounts.
Now the Reagan administration proposes to end this distinction by making all employes eligible to set up IRAs. A Treasury Department spokesman said the proposal would provide additional protection for workers with weak company pension plans and those who don't expect to remain with a company long enough to qualify for pension benefits.
But the broadening of IRA has opponents, too.
"It won't help the average worker, who can't afford to set aside money voluntarily for retirement," said Karen Ferguson, director of the Pension Rights Center.
The experience with IRA programs bears her out. Only 5 percent of eligible taxpayers with incomes below $20,000 set up IRAs, according to a study of 1977 tax returns; about 20 percent of those with incomes between $20,000 and $50,000 established IRAs, while for those above $50,000, the rate was 52 percent.
Under the administration's proposal, an employe who is an active participant in an employer-sponsored retirement plan (and who thus isn't eligible to set up an IRA now), could invest up to $1,000 a year in such an account and deduct the amount from his or her taxes.
In addition, the current limit of $1,500 for tax deductible IRA investments would be raised to $2,000 for those who aren't participating in company retirement plans.
The new IRA plan was added to the administration's tax plan for several reasons, administration officials and outside experts said.
It adds to the plan's popularity on Capitol Hill, where the IRA extension has strong support.
A broader IRA plan meets the concerns of House and Senate members who see an inevitable reduction in Social Security retirement benefits, said Dallas Salisbury, executive director of the Employe Benefit Research Institute, which has the backing of the banking and investment industries.
Finally, the new plan should significantly increase individual savings, a key goal of the administration's economic plan, Salisbury said, by creating a specific tax deduction for investments in retirement accounts.
Salisbury predicted that with the new proposal, individual savings would increase by nearly $2 billion a year at a cost to the Treasury of $200 million to $300 million.
Republican senators, who complained that the administration's original tax bill didn't do enough to stimulate savings, are encouraged by the change, said an aide to Sen. John H. Chafee (R-R.I.), a supporter of the IRA plan.
Ferguson and other experts question that conclusion, however, noting that it would be possible for people to transfer existing savings into new IRA accounts to get the $1,000 deduction.