I'm sure someone will correct my ignorance, but aren't the funds that
go into a traditional 401k/IRA taxed at a different rate than what comes out?
You get the break going in tax deferred at ordinary income, but when you take it
out during retirement it's taxed at investment rate. Kind of that whole
thing that Buffet's secretary pays a higher tax rate than Buffet does. Kind
of makes sense that the government would want a higher percentage now then a
lower percentage later.Either way, smells like elements of both
liberal and conservative thought to get more revenue.
@Tekakaromatagi.Interesting idea to make Social Security payments means
tested. But, you would also need to reduce Social Security payments to be bare
subsistence, basic and simple food, clothing and shelter. I will admit SS
payments are now not extremely generous. But, keeping them at current levels
encourages more people to spend their entire paycheck now rather than save for a
more comfortable retirement. To one degree or another, it punishes the thrifty
and rewards those who live beyond their means.But, any significant
change to SS is politically unrealistic. The majority of baby boomers have not
saved adequately for their retirement. Changing the current social security
scheme in any way will get any president or member of Congress kicked out fast.
And, yes, baby boomers will demand that the government spend their
grandchildren's money to take care of them in their retirement years. As
long as fertility rates in the US keep falling, the young will not have the
political power to change this for at least 30 or 40 years. That's just
the world we live in.
@NoNamesAccepted:"Ditto for anyone who suggests that those who do make
good use of their 401(k) should be rewarded with losing even 1 penny of the
social security they have earned with lifetime "contributions" to that
program."I will say it. If you are well to-do and retired, you
should not collect social security. Save social security for those who need
it.Please note, social security is funded by taxing people working
now. There is not a social security account with your name on it with a bunch
of numbers and dollar signs. (If you disagree with me, call the social security
administration and ask them how much money is in your account.)Why
should people who are struggling financially have to pay for me when I retire if
I can retire comfortably with my 401K and savings? That is not fair.I scrimped and saved so that I would not have to rely on taxing people living
hand to mouth , with too much month and not enough paycheck to pay for my
retirement. I am a socialist that way.
It makes perfect sense. Baby boomers discovered this tax loophole in 1978 and
took full advantage of it during their prime earning years. Now that
they're retiring they want to close it off. Money that would have gone tax
free into a 401k is going to stay out in the economy now; where it will be taxed
over and over. I'm guessing the extra tax revenue will probably help shore
up social security and medicare. What a coincidence.
2 bits,Again I agree with you and the only specific comments you
respond to are ones that are made by people that appear to be left leaning and
speak out against those on the right. What I am saying is don't accuse one
side and label them when your side does the same thing. Most of the
negative comments right now will be toward republicans because they control both
houses and the White House and have opted to try and govern from the far right
without any effort at bipartisanship. So when people say republicans want XYZ
they are referring to the current republican leadership who have crafted a tax
plan that focuses on tax cuts that not in terms of dollars because everyone
knows the wealthy pay more but they are also given tax cuts in this proposal
that only benefit them. Taking away the 401 was potentially very hurtful to the
upper middle class. Who wanted to do it? The republicans in congress. This
tax plan is not upper middle class or poor or elderly friendly but it is very
friendly to the wealthy and the creators of the tax cut, the republicans will
need to own it.
@Vermonter – “Finally, we may have found an issue (401k tax breaks)
that unites liberal and conservative at least at the grass roots
level.”I think there’s a lot we actually agree but our
media (and who owns them) seems to want us to only talk (i.e., fight) about the
stuff that divides us.And where are you all getting the
“deficit neutral” stuff?From what I’ve read the
House tax plan will add at least $1.5 Trillion to the deficit, and that’s
even with fairly optimistic growth projections.
@Tyler D.You may be right. A lot of the Party faithful serving in
Congress may be bought and paid for. Oddly, this was a lot of the reasoning
used by most of the Trump diehards (especially in Michigan where I live) that
want to "drain the swamp."I, too, was surprised that the
Republican leadership initially had termination of 401k tax breaks in their tax
bill. It does go against everything they have been preaching for years.Finally, we may have found an issue (401k tax breaks) that unites
liberal and conservative at least at the grass roots level.
someone explain this! Otherwise I’m forced
to reach the most cynical conclusion (which many on the Left already believe)
which is that Republicans are so bought and paid for by the 1% that they really
don’t care about the rest of us."Their deficit neutral tax
plan disproportionately benefits the rich (partly because of what cuts they
picked, and partly because the rich pay most of the taxes so pretty much any tax
cut would help them more) paid for (it's deficit neutral) by the poor and
elderly (cuts to Medicaid, Medicare, SNAP and other programs).They
don't have to go after 401K's to show they're bought and paid for
by the 1%.
@Fred44 11:00,I said I'm tired of people making assumptions about
others based on their stereotypes for them. "People". That would
include both Democrats and Republicans. They are both "People".Everybody does it. I know I sometimes do it. Didn't say only
Democrats do it.In my comment I did say I think THIS assumption (The
specific one in the comment I was responding to) was based on Democrat and media
blather. And it is. But don't expand and then assume I think ALL comments
are based on Democrat blather. I was addressing a specific comment. The
assumption that "Republicans would LOVE to destroy our IRAs".Republicans want people to save for retirement.Reducing the max
you can protect is not "destroying" your 401k.It's
reducing the amount of your income you can hide from taxes (something I assume
Democrats would like, but I'm not sure).But I am sure I
don't want to destroy your IRA. And Rs in general would not Love to
destroy your IRA.===RE: "In my experience
republicans are just as guilty as democrats of making these
generalizations"...---Me too. Never said it was just Democrats.
But that specific comment I was talking about was.
So as of this morning, changing the 401k deduction is now off the table. No
doubt our representatives were flooded with angry calls (another why big
legislation should never be rushed).But again, I cannot wrap my head
around the fact that Republicans posed this in the first. It seems antithetical
to everything they’ve preached for decades.Please
someone explain this! Otherwise I’m forced to reach the most cynical
conclusion (which many on the Left already believe) which is that Republicans
are so bought and paid for by the 1% that they really don’t care about the
rest of us.Trying to keep an open mind here but the cognitive
dissonance is deafening.
@2 bits"Have you actually met and talked with any R who said they want
nothing more than to destroy IRAs and 401Ks? Or is that an assumption?"Fair question. Have you ever actually met and talked with any D who
said they wanted nothing more than taxpayer-funded abortion on demand? Or is
that an assumption?
@2 bits.Actually I am a little surprised that the typically more liberal
commenters here are for the most part against taking away the 401k tax break.
401k tax breaks are about letting pretty much anybody that has a job
keep more of their own money, and encourage them to save for retirement. One of my liberal friends in my community (who is doing well
financially) frequently tells me that he should pay more taxes to help the
government take care of the less fortunate. To him, removing the 401k tax break
is one way to do this, and better "share the wealth" of America with
2 bits,I couldn't agree with you more when you talk about
people making generalizations about other people and assuming they know what
they think and what they believe. You said "I think that's mostly
Democrat and media blather about Republicans." So based on that it appears
you are saying that only the Democrats and Media make these generalizations. I
make that assumption based on this comment and many other similar comments. In my experience republicans are just as guilty as democrats of making
these generalizations. I would think you would point that out with equal time
for both. You do at times point out republican mistakes but typically you point
out one republican mistake and follow it up with ten democratic mistakes. I
would say that we are in a hyper-political world right now where both sides play
politics and neither side is innocent. I think a fair minded person would point
that out in a balanced way.
@stevo123 - Driggs, IDRE: "Republicans would love to see it
destroyed"...---A rash assumption on your part.But
I'm used to these false assumptions about me and others. Assuming they
know what we want. Based on what? Their political stereotypes for certain
people. If you are an R... you must think XYZ (based on assumptions
and stereotypes).I'm kinda tired of the grouping people and
judging them, and pretending you can read their mind and know they think/want...
based on your stereotypes and the letter you put by their name.Have
you actually met and talked with any R who said they want nothing more than to
destroy IRAs and 401Ks?Or is that an assumption?I think
that's mostly Democrat and media blather about Republicans.I
know what I think, you don't know what I think. The DesNews doesn't
know what I think. And I don't want to destroy IRAs. So don't assume
I want to do something I know for a fact I don't want to do.I
like my 401K.I don't trust SS, but I do my 401K. Because I
control what I put into it, and what I take out of it (not some politician who
may decide somebody else deserves what I put in there more than I do).401Ks are a great thing IMO.
Agree with other commenters that this article is spot on. If the
comments on here are any gauge, both conservatives and liberals should be
contacting their representatives in Washington to tell them to leave 401ks
alone. I think the trouble is that some people who have made their
careers and lives in Washington (Republican and Democrat alike) think that 401k
tax deductions cost the government too much money. On top of that, I think
there is a smaller (but not necessarily impotent) group in Washington that think
401k tax breaks are simply tax breaks for the wealthy. This smaller group
believes that if a person has any significant amount in a 401k, they are by
definition "rich" or "wealthy."
Excellet editorial. The pre-tax (or more correctly, tax-deffered) limit should
be raised, not lowered.
The 401k program is a chance to let the middle class retire. Republicans would
love to see it destroyed.
Lets not forget that when David Koch ran for vice president in 1980 his platform
called for the elimination of SS, medicare, medicaid, etc. etc. And
this is the person who funds a multitude of libertarian, and conservative think
tanks including Americans for Prosperity, Libertas, the Tea Party, and the
Libertarian party. Many of whose ideas we see referenced daily in this
newspaper.These ultra far right groups and ideas now permeate the
republican party, and this budget is helping realize David Koch's wish list
from this 1980 run.
This is a huge deal, to borrow a phrase. The article and posters are correct.
This is the single difference between the middle class having a safe retirement
and insecurity. Anyone who opposes or reduces the effectiveness of
the 401K exposes their true lack of support for the middle class. The GOP will expose it's true intentions if it supports these reductions,
and continues to try to diminish Social Security, plus eliminate the ACA.
Too bad, all this hand wringing and fretting is for naught. It isn,t going to
happen. Just a nice tax break for the middle class.
Will a Republican/conservative here please explain to us the logic of lowering
the limit for 401k contributions?I thought the end game for the
Right was to do away with Social Security and to promote personal responsibility
by incentivizing us to save more of our own money for retirement.This proposal seems to fly in the face of that “conservative”
Since Citizens United was passed our legislators don't care about regular
people, they care about those who donate to campaigns.That is why
all of the laws benefit donors and wealthy people, while giving crumbs to the
rest. We need to separate money from elections or this will continue.
Without social security reforms, having a good 401K is my only shot of not being
homeless when I'm 80.Especially if these cuts are to underwrite
the tax cuts on the superrich.
This op-ed is spot on. And anyone, in either party, who even suggests reducing
our ability to contribute to and earn retirement in a 401(k) should be promptly
retired at the very next election. Ditto for anyone who suggests
that those who do make good use of their 401(k) should be rewarded with losing
even 1 penny of the social security they have earned with lifetime
"contributions" to that program.Some of the best tax cuts to
give are those that reward and encourage saving for major life expenses such as
retirement, medical expenses, and college expenses. The fewer strings attached
to such programs, the more likely people are to make use of them and save. That
is good for individuals and families, and so it is good for society.Let's see what can be done in the tax code to encourage employers to
offer larger 401(k) matches. That also encourages more saving on the part of
employees.A great editorial. Thank you.