One Problem, it is not a tax break but a tax deferral to payed once the the 401K is distributed.
http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971
An excerpt:
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
Under Ms. Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3% a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
“I want to stop the federal subsidy of 401(k)s,” Ms. Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”
End of excert
Farther on in the article it says that companies would probably not do the matching that they do now if no tax break incentive. So - for $600 a year you lose your matching funds and get 3% a year on your savings. Sounds like a real winner to me. I sure hope they can come up with a health plan that is just as great.
One Problem, it is not a tax break but a tax deferral to payed once the the 401K is distributed.
One Problem, it is not a tax break but a tax deferral to be paid once the the 401K is distributed.