401(k) Tax Changes May Be On Fast Track

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

[EVO X]

Forget 401Ks. I don’t contribute to mine anymore. I don’t want the US Govt as my partner in retirement. They will change the rules on the 401Ks, if not outright confiscation of them altogether, later - mark my words. The counterparty risk of the 401K is way too high, IMHO. I’ll pay the taxes now, thank you very much.

Personally, I think the risk of the government confiscating retirement funds directly is rather low. They can steal it without being so blatant about it.

If they need the money, they aren't going to just target retirement accounts..

[whd23]

	Max earnings	total employee rate	total employer rate	total self-employed rate	Employee & Employer	Self-employed
			$0.00	$0.00
1966	$6,600.00	4.20%	4.20%	6.15%	$554.40	$405.90
1967	$6,600.00	4.40%	4.40%	6.40%	$580.80	$422.40
1968	$7,900.00	4.40%	4.40%	6.40%	$695.20	$505.60
1969	$7,900.00	4.80%	4.80%	6.90%	$758.40	$545.10
1970	$7,900.00	4.80%	4.80%	6.90%	$758.40	$545.10
1971	$7,900.00	5.20%	5.20%	7.50%	$821.60	$592.50
1972	$9,000.00	5.20%	5.20%	7.50%	$936.00	$675.00
1973	$10,800.00	5.85%	5.85%	8.00%	$1,263.60	$864.00
1974	$13,200.00	5.85%	5.85%	7.90%	$1,544.40	$1,042.80
1975	$14,100.00	5.85%	5.85%	7.90%	$1,649.70	$1,113.90
1976	$15,300.00	5.85%	5.85%	7.90%	$1,790.10	$1,208.70
1977	$16,500.00	5.85%	5.85%	7.90%	$1,930.50	$1,303.50
1978	$17,700.00	6.05%	6.05%	8.10%	$2,141.70	$1,433.70
1979	$22,900.00	6.13%	6.13%	8.10%	$2,807.54	$1,854.90
1980	$25,900.00	6.65%	6.65%	8.10%	$3,444.70	$2,097.90
1981	$29,700.00	6.70%	6.70%	9.30%	$3,979.80	$2,762.10
1982	$32,400.00	6.70%	6.70%	9.35%	$4,341.60	$3,029.40
1983	$35,700.00	7.00%	7.00%	9.35%	$4,998.00	$3,337.95
1984	$37,800.00	7.05%	7.05%	14.00%	$5,329.80	$5,292.00
1985	$39,600.00	7.15%	7.15%	14.10%	$5,662.80	$5,583.60
1986	$42,000.00	7.15%	7.15%	14.30%	$6,006.00	$6,006.00
1987	$43,800.00	7.51%	7.51%	15.02%	$6,578.76	$6,578.76
1988	$45,000.00	7.51%	7.51%	15.02%	$6,759.00	$6,759.00
1989	$48,000.00	7.65%	7.65%	15.30%	$7,344.00	$7,344.00
1990	$51,300.00	7.65%	7.65%	15.30%	$7,848.90	$7,848.90
1991	$53,400.00	7.65%	7.65%	15.30%	$8,170.20	$8,170.20
1992	$55,500.00	7.65%	7.65%	15.30%	$8,491.50	$8,491.50
1993	$57,600.00	7.65%	7.65%	15.30%	$8,812.80	$8,812.80
1994	$60,600.00	7.65%	7.65%	15.30%	$9,271.80	$9,271.80
1995	$61,200.00	7.65%	7.65%	15.30%	$9,363.60	$9,363.60
1996	$62,700.00	7.65%	7.65%	15.30%	$9,593.10	$9,593.10
1997	$65,400.00	7.65%	7.65%	15.30%	$10,006.20	$10,006.20
1998	$68,400.00	7.65%	7.65%	15.30%	$10,465.20	$10,465.20
1999	$72,600.00	7.65%	7.65%	15.30%	$11,107.80	$11,107.80
2000	$76,200.00	7.65%	7.65%	15.30%	$11,658.60	$11,658.60
2001	$80,400.00	7.65%	7.65%	15.30%	$12,301.20	$12,301.20
2002	$84,900.00	7.65%	7.65%	15.30%	$12,989.70	$12,989.70
2003	$87,000.00	7.65%	7.65%	15.30%	$13,311.00	$13,311.00
2004	$87,900.00	7.65%	7.65%	15.30%	$13,448.70	$13,448.70
2005	$90,000.00	7.65%	7.65%	15.30%	$13,770.00	$13,770.00
2006	$94,200.00	7.65%	7.65%	15.30%	$14,412.60	$14,412.60
2007	$97,500.00	7.65%	7.65%	15.30%	$14,917.50	$14,917.50
2008	$102,000.00	7.65%	7.65%	15.30%	$15,606.00	$15,606.00
2009	$106,800.00	7.65%	7.65%	15.30%	$16,340.40	$16,340.40
2010	$106,800.00	7.65%	7.65%	15.30%	$16,340.40	$16,340.40
2011	$106,800.00	5.65%	7.65%	13.30%	$14,204.40	$14,204.40
Total					$335,108.40	$323,735.41

[redgolum]

The current view is that something is tax deductible, it is actually subsidized by the government.

I actually expect that the 401K law will be revoked or all the money seized eventually.

[redgolum]

If my company didn’t have matching funds, I would drop the 401 K.

Over course, I will never be able retire. To many people expect that you can have a second childhood and stop working. That will not be an option for many in the future.

[Lilly Rose]

Why should their be any restrictions? Get your hands out of our pockets now Obama!

[wintertime]

There you go. There is what this is really about. The Lefties are all up in arms that IRAs and 401Ks are reducing TAX REVENUE.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Let's call them what they are: Marxists or communists.

Would a Marxist want the middle classes interest in or attached financially in any way to capitalism? No! Of course not!

If the middle classes have their retirement invested in the private market then they will vote for legislators who will protect that eeeeevil and capitalistic free market.

[astounded]

It seems the leftists are inviting a shooting war....in which they would have no chance of prevailing. It happened in 1775....

[PMAS]

*

[WOBBLY BOB]

I wonder how long before they rescind exeptions to the ROTH and start taxing that ,too.

IMHO, it’s just a matter of time.

[CGalen]

“They wasted the money in the Social Security “Trust Fund” and now they want to make it harder for us to save for our own retirements.
Give me back the 12.4% you’ve been taking from my paycheck”

---

Give me back my 12.4%, and everything I/my-employer have put in for the past 50 years, PLUS interest, and then you can keep your Social Security.

[CSM]

Of course. We have to ensure that people MUST rely on the GOVERNMENT for their retirement. Otherwise they may be evil promoters of freedom.

[Rusty0604]

Thanks for posting. I see you included medicare in that.

[listenhillary]

FTA

“Gale cited the Tax Policy Center’s estimate that the immediate, direct revenue loss associated with contributions to IRAs and 401(k) plans will exceed $1 trillion over the next decade.”

Dumb cluck’s. There is no loss. One. It’s not your money. Two. Taxes are merely deferred and it is likely that tax rate will be higher when withdrawn.

[whd23]

Yes, I did. I suppose I should have broken the two parts out and figured the dollar contributions and totals for both OASDI and HI.

A project for another day, I guess :)

[grumpygresh]

This will make the markets tank. If tax deffered investment is capped, even for the evil rich people, there will be less private capital availible and hence reduced economic growth (less private sector jobs). The markets are already under long term pressure from the retirement of the baby boomers, who will be net sellers of equities and other investments.
We should instead make it easier to invest for everyone, not harder. This is just more big government socialism that could trigger a depression.

[Pontiac]

IMHO in order to have "Revenue" you have to produce a good or service that is sold of which you are compensated justly for in the Private Sector.

It one of the evils of government that they have despoiled the word “service”.

Regulatory agencies such as the Nuclear Regulatory Agency now charge those they regulate for their “Services”.

A number of years ago when the Congress was trying to cut the deficit they decided the many of the regulators had to “pay their own way”. They would have to finance their own budgets by charging for their “services”. So now the NRC and some other regulators at least partially fund their budgets by billing those they regulate or imposing fines.

While on the surface this does not seem like a bad idea because it reduces the need for taxes overall it does give the regulator perverse incentives.

Regulators will take longer to review license applications to increase fees. Regulators will more frequently impose fines for minor infractions. Regulators will increase the number and complexities of regulations to boost the chances of finable offenses.

But yep the government is out their providing invaluable “SERVICES” (remember the Internal Revenue Service is there to help)

[aMorePerfectUnion]

If Zero wins, we can expect capital controls to keep any wealth from fleeing country and the nationalization of retirement accounts - probably through the requirement to hold some portion in US Treasury securities.

Anyone who does not act now to establish an offshore bank account, purchase gold and store it outside the country, etc. will no longer have the option.

Anyone with a retirement account will be forced to have the Federal Gov’t as their investment advisor - for their safety, of course.

Am I the only one here taking action?

ampu

[GrumpyOldWASP]

So those Green-eye shade Trotskyites in DC think it would be more prudent to tax us first before we contribute to our 401 (k)’s and then again when we withdraw from them. Nothing like a little double-taxation to grow the Gubmint coffers. Oh, and their side of the pact is they will “allow” us to have our accounts continue to grow tax-deferred. How nice. If they would just stop the run-away spending it would do a lot to reduce the pressure for revenue which they so desperately need....

[skinkinthegrass]

A Kentucky Ping.

...for those interested. :D

....from the WH / Senate, Its an "end round" the HoR
Repeal the 17th Admt. and bring the Senators home and (rigidly) held accountable the 10th Admt.

[StAnDeliver]

Kind of harsh -- he treated Reid with appropriate disdain during the 109th.

Look, there are better, and there are much worse. When the next President's most important task is picking the next 4 Supremes, that's when you want the best parlimentarian.

Plus Kentucky elected Paul the Younger -- unlike so many states that can't bring themselves to send anything but Democrats to the Senate. Yours, perhaps?