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Posted on 10/20/2017 12:01:10 PM PDT by NohSpinZone
Proposals floating around Washington to cap the amount that Americans can contribute before taxes to 401(k) plans and individual retirement accounts are unsettling professionals in the retirement industry.
Republicans are looking for ways to generate revenue to support broad reductions in individual tax rates. One idea is to limit the amount of pretax money households can sock away for retirement saving. Such a move would likely generate significant political blowback but it hasn’t been explicitly ruled out, stirring worry among industry lobbyists.
(Excerpt) Read more at marketwatch.com ...
There’s talk of capping 401(k) contributions at $2,400 per year
http://www.freerepublic.com/focus/f-news/3596931/posts
bttt
A person would have to start at about age 18 to make this a worthwhile and meaningful accumulation towards their eventual retirement fund.
Nuts, and I thought I did a thorough search! Mods, please delete.
No problem. It happens.
Take care.
No sources named. This isn’t in Trump’s plan. I’m calling BS on this one.
Roth?
I don’t think so.
THIS will NOT go over well in the USA!
“FIX THE SPENDING PROBLEM, YOU SCHMUCKS!”
$4 trillion/year ~= $13,000/year per American per year
I live on about $5,000/year.
Federal spending is absurdly out of control.
They basically are considering allowing the same amount but everything over $2400 would have to be in a Roth 401k. For some people, like myself, that would be just fine, but 90%+ of people have a lower rate in retirement than their highest marginal rate while they are working. Same reason I recommend a regular IRA vs Roth IRA for most people since you can invest ~45% for the same amount of money with the tax savings (eg: putting in $5,500 into regular IRA/401k will only cost you $3,800 after a 25% fed + 6% state marginal tax savings).
$2,400*40 years < $100,000 in total
That $100,000 is only about an eighth of what a public school teacher or police officer will get in total retirement pay, on average.
“but 90%+ of people have a lower rate in retirement than their highest marginal rate while they are working.”
Really, the most important failure of IRAs... the presumption and preparation is that you will be poorer in the future.
From there, it goes downhill.
Then again, there are other vehicles besides a 401(k) to save for retirement. Not many have the discipline to do that. The 401(k) is easy because it comes right out of your paycheck (and many companies match it up to a certain percentage).
No - it’s the assumption you aren’t going to be working at some point in the future.
You act as if this was real news. I’ll bet this was pure made-up news. I doubt any Republicans are pushing this. I call BS on the story.
Certainly I don’t believe Trump would sign a bill that capped 401K’s to such a low amount.
If they limit the contributions to $2400/year, but keep the stock market going up at the pace since Trump was elected for the next 50 +/- years, it should work out just fine....
I hate government. I am far from Anarchist and feel good government is essential but I hate what the American government has become. It’s disgusting as it slowly shreds the future generations of living anything close to what once was the “American Dream”.
With the elimination of Defined Retirement Plans by most businesses and movement of people into 401(K) plans, at the behest of the government, this will kill retirement saving. And it will kill any support for tax reform if they push it.
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