Posted on 10/12/2011 4:26:54 PM PDT by Kaslin
s your 401(k) safe from the tax man? That's a question that might be worth asking, as the congressional "supercommittee" scrambles to find $1.5 trillion in additional deficit cuts.
In September, the Senate Finance Committee held a little-noticed hearing that explored changes to retirement plans — principally employer-sponsored 401(k)s — that would in one way or another cut their tax deductions.
The tax breaks' size makes them a tempting target for lawmakers. According to the White House budget office, tax exemptions for 401(k)s and IRAs will "cost" the government more than $436 billion over the next five years.
Senate Finance Committee Chairman Max Baucus, D-Mont., complained that "in spite of the tremendous tax preferences," Americans aren't saving nearly enough for retirement.
Critics say the existing system benefits mostly the rich. The liberal-leaning Tax Policy Center calculates that 80% of these tax "expenditures" go to the top 20% of earners. Such people "would almost certainly save for retirement even without tax incentives," said Karen Friedman, policy director at the Pension Rights Center.
But Judy Miller of the American Society of Pension Professionals and Actuaries argues that the deduction's cost is wildly exaggerated. Adjust for the taxes paid when retirees withdraw money and the cost is cut in half.
And, she says, the break is more progressive than some allege. Among other things, high earners who get a bigger tax break going in end up paying more in taxes when they take the money out.
(Excerpt) Read more at investors.com ...
Ping
Since Cain’s 9-9-9 plan does not preserve the deduction for 401Ks then this may be an issue regardless of who wins in 2012/
check out this bunch of white wine marxists and their union-backed links
they aim to do the exact opposite of their organization name - tax retirement accounts in the name of “equity”. This is the unions looking for loose change in the sofa cushions to pad their own benefit programs. Insatiable.
Even THREATEN to tax my 401(k) and I will abandon the program, take the tax hit, and find another private avenue of accumulating wealth for retirement.
And I won’t be alone. By the time the democrats get there, there will be George Bailey’s $1 in the lock box and nothing more.
I don’t cotton much to bait and switch.
That, and probably just about anything else that isn’t nailed down.
You bet your @$$ they are.
There going to take away the last refuge for middle income earners. For those that are living off their investments, this is like changing the rules after putting your ante in the pot. Time to pull it all out, renounce the citizenship and live abroad.
Took the money, paid the tax.
Anyone with eyes and ears knew this was coming.
Correct. The St. Louis Fed published a scholarly article on this in 2004.
Isn’t the response to the headline question “do bears s**t in the woods”? Obama’s Peronista government is already looking to Argentina for inspiration.
Of course
I have been particularly concerned with this after I realized that Obama has merged all the big investment companies with the big banks, like Wachovia with Wells Fargo and Merrill Lynch with B of A.
I don’t like having all our money in one institution and I don’t like the government intrusion into those banks.
They would have done it by now, had the November 2010 elections not wiped them out.
As predicted, they've run out of other peoples money. If the Marxist can't pay off their voters with other peoples money, there's going to be heck to pay.
If they even talk about 401K's, pull out, and pull out fast. Starve that coveting beast. Let them use their own cushy saving accounts - to save themselves!
Yup.....you can bet that the democratcs are looking to steal this money. That’s what they do. It’s just a matter of time until they control congress again. A guy I work with just hit 59 & one half & moved all of his money out of these funds. He purchsed several rental properties. He figures he has a better chance, long term, of keeping this money in his own hands than staying with 401ks.
We haven’t pulled ours out yet. Even though we still have hope it’ll come back with a more conservative admistration I’m still buying more ammunition.
Has there EVER been an avenue of wealth extraction from the American people that the democrats DIDN’T approve of?
If anything can POSSIBLY be taxed, your friendly neighborhood liberals will sure as hell think of it!
Parasites all.... From OUR wallets to THEIR favorite constituents/contributors, often times at gunpoint!
Maybe I’m ignorant. Someone educate me please.
I thought that IRAs and 401Ks do NOT cost the government tax revenue long term.
Yes, they can claim that less is paid in taxes in the year the money is put away for retirement, but it is taxed as ordinary income in the year it’s withdrawn. So tax paid to the government in those years would be higher than they would be forecasting without IRA and 401K money.
So long term, it doesn’t “cost” the government any tax revenue, because the taxes are paid on the back end, not year by year.
If I’m wrong, somebody educate me.
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