401(k) Tax Changes May Be On Fast Track

The Street ^ | 09/23/2011 | The Street

[Rusty0604]

In the coming weeks, Americans could face sweeping changes to the tax deferral status and funding strategies of their retirement plans.

[CommieCutter]

This would not make it constitutional.

There was a time that statement used to mean something.

[Bainbridge]

You mean like Mitch McConnell. Screaming would work for him, as in “ like a Girl” but he is such a loser that he is incapable of taking on Harry Reid !!!

[clintonh8r]

every worker in this country would retire as a millionaire.

But that would be bad for class warfare.

[preamble]

Now the 401(K) IRS treatment will be only 18% of income credit???
The annual limit is $15,500.
This affects my state income tax because the 401(K) funds lower my AGI.
More state income taxes forever into the future.

Also, this makes Roth more attractive? It would pay to pay taxes NOW
rather than defer.

That’s what they want. They want the TAX MONEY NOW!!!!

That’s why I upped my contributions. No more tax money for you Obama!!!

[Rusty0604]

Some Republicans wrote a letter to the DOL when they were discussing taking private accounts. I posted it on FR but I can’t find it.

[rockvillem]

Here we go - the incremental approach to trying to implement the Argentina solution: the nationalization of private retirement savings. Obama and his fellow travelers LOVE the idea. To each according to his needs, from each according to his ability!!

[Fred Hayek]

How dare people plan for their own future, rather than be dependent on the Government. Such a concept is so selfish and mean spirited, oppressive of the poooor, not to mention raaaacist, sexist, and homophobic. Everyone should give all their income to the Government, and the Government will give them a little to get by on, as long as they worship the Government. (Except for of course the nomentklatura, they work so hard for us proletarian scum).

[nascarnation]

interesting comment

I paid into the SS system at the “limit” pretty much every year from 66 to 08.

I’ll have to make a spreadsheet and do that calculation.

After which I’ll probably throw up.

[spokeshave]

...........does it apply to a 201(k)..?

[txmissy]

*

[Aevery_Freeman]

stop trying to sugar coat the meadow muffin...

Unfair analogy...to the muffin, that is.

[NonValueAdded]

“When in the Course of human Events, it becomes necessary ...”

[Aevery_Freeman]

Every one of us should make the same calculation as should the government. Then the government should give us the equivalent amount in say land, mineral and other lease rights, buildings, surplus equipment and all the other things that they hold that they have no business holding.

Twofold benefit, people made whole and government reduced: win-win.

[KarlInOhio]

It looks like one of the major plans is to tax you now, give you a small dog biscuit of a tax credit for saving, and then tax you again on the whole amount when withdrawing it - even the part you already paid tax on. I think I would just skip and keep the money in a normal account and pay capital gains instead of regular income tax. (unless Obama uses a new Buffet tax to wipe out the lower cap gains rate)

[PAR35]

This affects my state income tax

That's something that you choose to pay. And your employer is probably paying you a premium to influence that choice.

You always have the option of choosing to NOT pay a state income tax.

[FlingWingFlyer]

The Kenyan and his Marxist pals stay awake all night thinking up ways to take away YOUR money. How 'bout that "spread the wealth around" bull****?

Anybody see the two "Please Make Me Pay More Taxes" fairies on O'Reilly tonight? ROTFL!!! Those two pixies shouldn't be allowed to have money. A couple of braindead morons. When Bill asked them why they just don't write a check to the Treasury and STFU, they both said they are sending the the difference between what they now pay and what they want to pay to their "charity". Ah yeah! Right! What a hoot. Morons on parade.

[Alberta's Child]

Interesting, but I don't see most of these proposals as all that draconian. For one thing, reducing the maximum that can be contributed by those 50 and older under the "catch-up" provisions of the tax code for 401(k) and IRA accounts isn't all that big a deal. I believe those "catch-up" provisions didn't even exist until a few years ago (2008, maybe?).

[Fred Hayek]

You always have the option of choosing to NOT pay a state income tax.

I exercised that option moving my business from Minnesota to Texas. Besides, with Dayton looking to increase the taxes on “the rich”, more business is leaving Minnesota.

[eyedigress]

You won’t like it. The DOW average rate of return on 12.4% investment on auto reinvestment of earnings and losses during that span would be very good. The Dow average in ‘68 was 906.

[Hoodat]

Consider a person earning $10/hr (in real terms) their entire life without ever getting a promotion. That person loses $215 per month to Social Security taxes. Let's say that person had the option of investing that money instead from age 20 to 65 in a retirement account earning 6%. At age 65, that person quits working and begins to withdraw an amount from that account equivalent to 87.6% of his life-long wage (i.e. the same money he has been accustomed to living off of), then by age 80 that retirement account would have over $1 million sitting in it.

That's for someone making 1.3 times the minimum wage. For someone like yourself, you might have $4 or $5 million saved up.