Biden’s plan to overhaul 401(k) tax breaks could force some companies to cut retirement benefits
Megan Henney October 16, 2020, 11:57 am
FTA
A frequently overlooked part of Democratic presidential nominee Joe Biden’s platform would upend the traditional tax preferences of retirement accounts like 401(k) plans — a change that industry experts warned could force some small companies to cut those benefits.
Biden has vowed to convert the current deductibility of traditional retirement contributions into matching refundable credits for 401(k)s, IRAs and others.
The proposal from the former vice president is intended to level the playing the field of tax deferral in traditional retirement accounts, with the intent of boosting saving among low-income earners. But industry experts cautioned that by reducing the benefits that higher earners receive, the Biden campaign may have increased the likelihood of businesses abandoning those retirement benefits altogether.
“If you take the tax deduction away and reduce the tax benefit, without also addressing the nondiscrimination rules, you’ve blown up the bargain,” Brian Graff, the CEO of the American Retirement Association, told FOX Business.
Exactly. I was fortunate to have a 457(f) plan in addition to 401(k). If I hadn’t had that tax benefit when I was working in California I would have paid so much more in taxes I would hardly have been able to save anything. Especially after I sold my condo and had no dependents.
Biden says he doesn’t want to increase taxes for those making under 400K, I call this a tax increase.
And don’t they want to tax capital gains before the asset is sold? Insanity.