Posted on 10/20/2017 9:58:58 AM PDT by C19fan
Proposals floating around Washington to cap the amount that Americans can contribute before taxes to 401(k) plans and individual retirement accounts are unsettling professionals in the retirement industry.
Republicans are looking for ways to generate revenue to support broad reductions in individual tax rates. One idea is to limit the amount of pretax money households can sock away for retirement saving. Such a move would likely generate significant political blowback but it hasn’t been explicitly ruled out, stirring worry among industry lobbyists.
(Excerpt) Read more at marketwatch.com ...
I’m so “galt” that my main goal is to simply hide all I can from the government. But since I’m not rich, that’s not a big deal.
The key for me is to keep my TAXABLE income low enough so that I don’t have to pay a penalty for no health insurance.
Agreed. If you are XYZ manufacturing company, would you rather have people buying your stock or buying your product? Depends on a number of factors.
The financial advisor who administered the 401(k) plan for my old company occasionally calls me for investment advice. :-)
I ran the scenarios for #2 and #3 past him when Roth IRAs were first adopted back in the 1990s. He thought about it for a while and then changed his company's strategies for advising clients after that. They were generally OK with Roth retirement accounts, but they began strongly advising AGAINST doing traditional-to-Roth IRA conversions and paying taxes on the conversion up front ... for the reasons I laid out there in #2 and #3.
Had to think about that. I’d rather they bought my products.
It’s unusual to get a direct placement of stocks from the company to the investors. Most often, stocks are bought on the market, from other stockholders. If the price is driven high enough, it can increase the company’s capitalization value, but an individual investor buying stocks has little effect on price.
As a company, I probably make more money on product sales once the initial stock offering is over, because I make nothing whatever when stocks trade hands individual seller-to-buyer.
“Understand but with a wife and two kids to educate, house and feed need all the after-tax income I can get.”
Save $50.00 per pay then! You have to pay yourself first. Nobody will support you later in life. You must plan and execute now. Save SOMETHING!
If true, it is VERY short sighted. With Social Security being an unreliable source of income in the future, if the government doesn't STRONGLY ENCOURAGE saving for retirement, they will end up supporting a whole generation of oldsters. Even swamp dwelling government bureaucrats should be able to figure out that it is cheaper to give tax breaks for 401ks now than have to provide full support later. Besides, the government gets their taxes when the oldsters begin to withdraw from the 401ks.
+1
Never happen, too many people relying on a broken ss system, nope.
Thx ... see my post #120.
The only caveat is that if you are a small business owner you may literally have no good choice - it’s fund your 401K to the maximum and hope they won’t take it away some day or keep the money and pay a 35% corporate income tax right away. Decisions, decisions... :)
What makes you think that the scum in government down the line won’t rescind the tax-free growth provisions in Roth? We all know they’re not above anything, these vampires.
Well, there is always that. Which is why I’ve divested myself of all that stuff. ALL OF IT. One part of my retirement strategy is to drastically lower my cost of living. So far we’ve been really successful at that...
I take this “going Galt” thing pretty seriously.
The one basic problem with any analysis like yours is that you know your current income tax rates but can only speculate on your future tax rates. This is why some financial advisors will tend to prefer a current tax deduction (especially if you are in a high tax bracket) to a future benefit that may or may not materialize.
Your claim cannot be proved that they are seeking to raise taxes. You are basing everything on deductions. As far as I know there have been no published income thresholds for the new proposed tax rates. Until that information is known, you cannot automatically state your taxes would go up. You cannot just assume that the new rates are at the same income thresholds.
I am all for the possibility of lowering taxes and forcing the states to be more responsible in their spending. Why don’t we just wait for the actual numbers proposed and then do real calculations?
I have as well. Talk about frightening...and just in time for Halloween!
>>Meh. 401k’s are a ripoff anyway.<<
Hey, back before I went independent I was more than happy to take my employer match.
If someone wants to just give me money, my answer is “thank you.”
My 401(k) has done pretty well for itself. It is self-sustaining since I went to an SEP.
Roth is good if you think you taxes when you withdraw will be more than your taxes now. I am the opposite of that — it will be much MUCH cheaper for me to pay the taxes in the future.
Also the Roth cap is so small you might as well put your money in your mattress. $6500 a year? After 20 years you will have maybe $150K. Enough for a guppy to retire.
Different strategies for different phases in life and wealth.
Note: If they cap 401K to $2,400 they might as well just end it.
Gold and silver have been losers for years.
If you times it EXACTLY right, you could have made some $$ but for the most part in general it would be a flat investment. I know if you just invested way back when and didn’t keep feeding then you would do OK (same for Stock market) — Gold about 3X and DJIA about 2.5.
But if you have it as a major part of your portfolio you have to look at the delta between the purchase price and its value at any given time.
All told, gold may not be a bad portfolio buffer but having a significant investment in it is probably not a good strategy.
Precious metals are an emotional investment.
401(k) plans allow employees to invest automatically and directly into managed funds--some not so good, but many are very excellent, and a good way for millions to save large nest eggs rather conveniently.
Your brother, by damning the 401(k), is trying to send business to someone like himself. How self-serving.
Don't get me wrong, I know full well that there are operating costs to running 401(k) plans, and I know that employees who participate in such plans pay for them indirectly. In a large pool, the costs are usually very low, so the employee typically has a lot working for him.
I'm not dogging "SEC licensed investment brokers," but your brother is wrong to criticize the 401(k) as a "poisonous" tool. By the way, there are 401(k) plans that offer a Roth version, too. It's a pay me now, or pay me later decision.
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