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I knew it. I just KNEW they were going to get around to this. My fear has always been that by the time I was ready to take out my 401K money, they would have instituted some kind of tax on it, and I bet they are going to do it. It's just too tempting - to be able to get their hands on all of that money. The dogs. When will promises made to the American people ever be lived up to?

Perhaps you should have read the tax law before contributing to your 401K if this really concerns you!

401K plans (and their various cousins such as 403B and others) have always been TAX DEFERRED, not TAX FREE. The value of these (as well as "traditional IRAs") plans is that you are able to reduce your taxable income while working and contributing then, when you draw the money out in retirement, you (typically) are in a lower tax bracket.

There is no free lunch here!

The ROTH IRA (and its cousins) is a different breed in which you don't get any tax benefits up front but when you draw the money out in retirement it (for now at least) is totally tax free (including whatever the account earned over the years).

Save you outrage for the day that the guv'mint institutes a "wealth tax" to pay its mountain of obligations! At that point it will renege on prior promises not to tax ROTH IRA benefits. Also, at that point, your 401K contributions will probably be taxed at a much higher rate than the rate in effect when you made your "tax deferred" contributions!

If you realluy want to lose your lunch, please consider this. The law governing 401-K's states that you MUST begin withdrawing money at age 72. If you do not (let us say you are still working) there is a tax of 50% on the undrawn amount.

How do you like that one?

Regards,