The shape of 401(k) plans may be altered if discussions moveforward on reducing or completely eliminating tax deductions forretirement plans.

That's according to Pentegra Retirement Services, a White Plains, N.Y.-basedprovider of retirement plan offerings.

“The net effect on over-50 employees, in particular, could bedeeply devastating. But everyone's retirement savings are at risk if 20/20 or other measures takento reduce the deficit are implemented,” said Rich Rausser, seniorvice president of client services for Pentegra.

Rausser said the money an employee puts into a 401(k) might besubject to taxation before they invest it in the plan.

“Future contributions might not grow on a tax-deferred basis.All itemized deductions, including those for retirement plans,could be capped. Even the currently tax-free earnings in a Roth IRAcould be taxed,” Rausser said.

Tax breaks for 401(k) and similar retirement savings plans add up to $100 billion a year and reportedly willcost the government an estimated $429 billion from now to 2017,Pentegra said.

According to the Employee Benefit Research Institute, more than70% of workers earning $30,000 to $50,000 participate in theiremployer's 401(k) plans, Pentegra said.

Rausser said under current law, employees under the age of 50can contribute up to $17,500 in their 401(k) plans in 2013, whilethose aged 50 and older can contribute up to $23,000.

Under the terms of a new proposal, which is a recommendation ofthe Bipartisan Policy Center's Debt Reduction Task Force known asthe “20/20 Plan,” an employee and his employer together would bepermitted to contribute up to $20,000 or 20% of the employee'ssalary, whichever is less, to a 401(k) account, Rausser said,adding this includes the employer's matching funds.

Rausser said the American Society of Pension Professionals &Actuaries, a national organization of more than 10,000retirement and benefits plans, is against such actions.

“We understand Congress needs to reduce the debt and raiserevenue but raiding the tax incentives for 401(k) plans will putAmerican workers' retirement security at risk,” said ASPPAExecutive Director/CEO Brian Graff, in a statement provided byPentegra.

“Tens of millions of Americans participate in these retirementplans, and 80% of them earn less than $100,000 per year. This is abattle that American workers simply can't afford to lose,” Graffsaid.