Welcome!

By registering with us, you'll be able to discuss, share and private message with other members of our community.

SignUp Now!

Biden's 401K Proposed Plan Changes

Alpha_Cock

A Real A Hole
Founder
Joined
Jan 11, 2021
Messages
238
Good God man. They are moving faster than I thought on destroying retirement plans.

First, no more tax deduction, it will be a "tax credit". That will undoubtedly morph into income limitations on a tax credit if you make over $100K in a few years.

Second, 401Ks for those that can't get one through their employer. Sounds all well and good. But, it will be an automatic 401K plan that could be government-based. Sound familiar? Like maybe from 1935, called the Social Security Act, which is no longer a retirement fund, but a tax to a slush fund.

https://money.usnews.com/money/reti...sident-bidens-proposed-changes-to-401-k-plans

President Biden’s Proposed Changes to 401(k) Plans​

The 401(k) tax deduction could be replaced with a tax credit.​



By Rodney Brooks, Contributor Jan. 22, 2021, at 12:55 p.m.
More

Biden's Proposed 401(k) Changes


PRESIDENT JOE BIDEN HAS proposed changes to 401(k) retirement savings plans that will have a big impact on the tax break provided to 401(k) participants. If the Biden 401(k) plan were to become law, the tax deduction for contributing to a 401(k) would be replaced with a tax credit. This 401(k) change would likely result in high earners getting less of a tax break on their 401(k) savings and low and middle earners getting a bigger tax benefit.
https://money.usnews.com/money/retirement/401ks/articles/steps-to-take-when-preparing-for-retirement
Here's a look at Biden's proposed 401(k) changes:
  • The 401(k) tax deduction would disappear.
  • Workers would instead get a tax credit for 401(k) contributions.
  • The tax advantage of contributing to a 401(k) would be reduced for higher earners and increase for low and middle earners.
  • The creation of an automatic 401(k) for workers without access to a workplace retirement account.
  • Allowing caregivers to make catch-up contributions to retirement accounts.
Biden Proposes Replacing the 401(k) Tax Deduction With a Tax Credit

Under current tax law, employees can have a set percentage of their salary invested in a 401(k) and defer paying tax on that money until it is withdrawn from the account. This tax deduction provides the greatest tax break to people with the highest incomes. For example, an employee earning $70,000 a year at the 12% tax rate can put $10,000 into a 401(k) and the tax savings would be $1,200. But a higher earner making $450,000 annually at the 35% tax rate who puts the same $10,000 in a 401(k) gets a tax break of $3,500.
Biden's proposal would end the tax deduction for contributing to a 401(k) and replace it with a tax credit. "Biden is proposing making it an equal tax break no matter what your income level is," says Bryan Bibbo, lead advisor at the JL Smith Group in Avon, Ohio. "The proposed tax credit is 26%, whether you are at $70,000 or $450,000."
The Biden campaign says this 401(k) change will "equalize" the tax benefits of 401(k) plans among various groups of employees. "Biden will equalize benefits across the income scale, so working families also receive substantial tax benefits when they put money away for retirement," according to a statement on joebiden.com.
The tax changes may also apply to 403(b) accounts for employees of nonprofit organizations, universities and government and 457 accounts for state and local government employees. "At 26%, everybody is getting the same credit," says Matthew Schwartz, a financial advisor at Great Waters Financial in Minneapolis, Minnesota. The credit could be refundable, meaning that workers who don't earn enough for the credit to offset their income tax liability would still receive the value.


401(k)s for Workers Who Don't Have Access to One​

A significant portion of the workforce is not able to qualify for 401(k) tax breaks because a retirement plan is not provided by their employer. The Pew Charitable Trusts found that 35% of private sector workers over age 22 work for a company that does not offer a 401(k) retirement plan. Millennials (41%) are the least likely to have access to an employer-sponsored retirement plan, but over a third (35%) of Gen Xers and 30% of baby boomers are unable to take advantage of the tax benefits of a 401(k) plan.
The Biden administration is calling for the creation of an "automatic 401(k)" for those who don't have access to a retirement account through their job. "There are a lot of people not able to contribute to pensions or 401k(s)," Bibbo says. "(Biden's proposal) would create an automatic 401(k), which may be private-based or government-based. People who do not have access to a 401(k) now will have access to a 401(k) that they can contribute to and have contributions coming out of their paycheck."

Catch-Up Contributions for Caregivers​

Workers currently need to have earned income in order to be eligible to contribute to a 401(k) plan. Biden has proposed allowing caregivers to make catch-up contributions to retirement accounts, even if they are not earning a formal income.
These potential 401(k) changes signaled by the Biden campaign could significantly change the tax benefits of 401(k) plans and create new opportunities to save for retirement, especially for people who don't currently have access to a 401(k). These Biden 401(k) proposals are not current law and the structure of these potential 401(k) rules is subject to change.
 

hmt5000

Overlord
Founder
Joined
Dec 10, 2020
Messages
3,149
Leftist have been dreaming of getting their hands on 401ks for years. I remember. in'08. reading reddit post about just rolling everyones money into one big pot and paying out like SS with means testing. Just a total lack of understanding why and how people save.
 

120north

Elite
Founder
Patron
Joined
Dec 9, 2020
Messages
184
Liberals are bad at math. Equalizing the benefit? The $450,000 earner likely pays 10x the tax of the $70,000 earner. You are giving him back something that is already his. JTFC. Income tax should be abolished. Plain and simple. Besides being morally wrong, it violates equal protection clauses.
 

22*43*51

Boob Enthusiast
Founder
Patron
Joined
Jan 7, 2021
Messages
8,668
Liberals are bad at math. Equalizing the benefit? The $450,000 earner likely pays 10x the tax of the $70,000 earner. You are giving him back something that is already his. JTFC. Income tax should be abolished. Plain and simple. Besides being morally wrong, it violates equal protection clauses.
This is how they fool their soft-headed base into agreeing to have shit taken away from them.

It's maddening.
 

dskurz

Leader
Joined
Jan 9, 2021
Messages
51
I'm confused, why do we need a government run 401k, even for those that don't get one through work. Are these people stupid & not realize that is what an IRA is? Or is the 401k designation needed so they would get the tax credit instead of the reducing the income at tax time?
 

Alpha_Cock

A Real A Hole
Founder
Joined
Jan 11, 2021
Messages
238
Leftist have been dreaming of getting their hands on 401ks for years. I remember. in'08. reading reddit post about just rolling everyones money into one big pot and paying out like SS with means testing. Just a total lack of understanding why and how people save.
If that happened, I don't see how this country will survive. I have spent 25 years building my "nest egg", no one or government is taking a substantial portion of personal wealth from me.
 

SoonerMD09

Leader
Joined
Jan 9, 2021
Messages
185
I'm confused, why do we need a government run 401k, even for those that don't get one through work. Are these people stupid & not realize that is what an IRA is? Or is the 401k designation needed so they would get the tax credit instead of the reducing the income at tax time?
Dem spending is expensive. They need to get the cash from somewhere.

Where better than from the rubes they govern?
 

GarnetPild

Overlord
Founder
Joined
Dec 2, 2020
Messages
3,922
make-taxation-theft-again-libertarian-anarchist-t-shirt-th_Hoodie_Navy.jpg
 

ChicagoFats

Overlord
Founder
Patron
Platinum
Joined
Dec 1, 2020
Messages
4,184
True... I've always operated under the assumption that my tax liability will be higher at retirement than now so I've been in Roth whenever available through my employer. I'm sure by the time I retire libs will decide the taxes I've paid on it my whole life won't be enough though.

Even with your assumption that rates may be higher when you are older, the math may still work out that you are better off investing in a 401k now instead of a Roth. Your pret-tax dollars are compounded for a long time and may make up for more than the difference in tax rates when you retire.
 

ChicagoFats

Overlord
Founder
Patron
Platinum
Joined
Dec 1, 2020
Messages
4,184
Well that is one way to get the earners more pissed off. Id imagine everyone would pull their accounts the weeks prior to the mandate and youd see a 20-30% decline in the stonk market. Buy gold and silver and bury it in the yard
You are kind of stuck. If you pull your accounts early you have to pay a 10% penalty and then you have to immediately pay the tax due on that money.

Sucks. Elect Republicans
 

Rebarcock.

Not a quitter
Founder
Platinum
Joined
Jan 8, 2021
Messages
5,913
You are kind of stuck. If you pull your accounts early you have to pay a 10% penalty and then you have to immediately pay the tax due on that money.

Sucks. Elect Republicans
I get that.
But id rather have my money rather than govt harvesting it and giving it back to me as the bureaucrats see fit. This is why you have to have a filibuster
 

America 1st

The best poster on the board! Trumps lover! 🇺🇸
Founder
Patron
Joined
Jan 7, 2021
Messages
16,098
Well that is one way to get the earners more pissed off. Id imagine everyone would pull their accounts the weeks prior to the mandate and youd see a 20-30% decline in the stonk market. Buy gold and silver and bury it in the yard
Agreed. Real assets are always preferred.
 

America 1st

The best poster on the board! Trumps lover! 🇺🇸
Founder
Patron
Joined
Jan 7, 2021
Messages
16,098
You are kind of stuck. If you pull your accounts early you have to pay a 10% penalty and then you have to immediately pay the tax due on that money.

Sucks. Elect Republicans
Get fired so you get a 'life changing event'.

Let them pay you to sit home for a few months (hurts my morals but you gotta learn to play their game).
 
Last edited:

atlrichkid

Elite
Founder
Joined
Jan 8, 2021
Messages
146
I'm confused, why do we need a government run 401k, even for those that don't get one through work. Are these people stupid & not realize that is what an IRA is? Or is the 401k designation needed so they would get the tax credit instead of the reducing the income at tax time?
they get more money to spend up front. Then 5 years from now they start modifying what they deem appropriate from a tax break for "high earners", another scam to create "revenue".
 

Alpha_Cock

A Real A Hole
Founder
Joined
Jan 11, 2021
Messages
238
Even with your assumption that rates may be higher when you are older, the math may still work out that you are better off investing in a 401k now instead of a Roth. Your pret-tax dollars are compounded for a long time and may make up for more than the difference in tax rates when you retire.
But, your post tax dollars in a Roth are compounded as well. I think a Roth (and a Roth 401K) are better vehicles for future retirement funds because you will have no tax liability after retirement. That is, of course, if there is some semblance of fiscal conservatism left in the government by the time you retire.
 

Rusty Strings

Leader
Joined
Jan 9, 2021
Messages
91
Good God man. They are moving faster than I thought on destroying retirement plans.

First, no more tax deduction, it will be a "tax credit". That will undoubtedly morph into income limitations on a tax credit if you make over $100K in a few years.

Second, 401Ks for those that can't get one through their employer. Sounds all well and good. But, it will be an automatic 401K plan that could be government-based. Sound familiar? Like maybe from 1935, called the Social Security Act, which is no longer a retirement fund, but a tax to a slush fund.

https://money.usnews.com/money/reti...sident-bidens-proposed-changes-to-401-k-plans

President Biden’s Proposed Changes to 401(k) Plans​

The 401(k) tax deduction could be replaced with a tax credit.​



By Rodney Brooks, Contributor Jan. 22, 2021, at 12:55 p.m.
More

Biden's Proposed 401(k) Changes


PRESIDENT JOE BIDEN HAS proposed changes to 401(k) retirement savings plans that will have a big impact on the tax break provided to 401(k) participants. If the Biden 401(k) plan were to become law, the tax deduction for contributing to a 401(k) would be replaced with a tax credit. This 401(k) change would likely result in high earners getting less of a tax break on their 401(k) savings and low and middle earners getting a bigger tax benefit.
https://money.usnews.com/money/retirement/401ks/articles/steps-to-take-when-preparing-for-retirement
Here's a look at Biden's proposed 401(k) changes:
  • The 401(k) tax deduction would disappear.
  • Workers would instead get a tax credit for 401(k) contributions.
  • The tax advantage of contributing to a 401(k) would be reduced for higher earners and increase for low and middle earners.
  • The creation of an automatic 401(k) for workers without access to a workplace retirement account.
  • Allowing caregivers to make catch-up contributions to retirement accounts.
Biden Proposes Replacing the 401(k) Tax Deduction With a Tax Credit

Under current tax law, employees can have a set percentage of their salary invested in a 401(k) and defer paying tax on that money until it is withdrawn from the account. This tax deduction provides the greatest tax break to people with the highest incomes. For example, an employee earning $70,000 a year at the 12% tax rate can put $10,000 into a 401(k) and the tax savings would be $1,200. But a higher earner making $450,000 annually at the 35% tax rate who puts the same $10,000 in a 401(k) gets a tax break of $3,500.
Biden's proposal would end the tax deduction for contributing to a 401(k) and replace it with a tax credit. "Biden is proposing making it an equal tax break no matter what your income level is," says Bryan Bibbo, lead advisor at the JL Smith Group in Avon, Ohio. "The proposed tax credit is 26%, whether you are at $70,000 or $450,000."
The Biden campaign says this 401(k) change will "equalize" the tax benefits of 401(k) plans among various groups of employees. "Biden will equalize benefits across the income scale, so working families also receive substantial tax benefits when they put money away for retirement," according to a statement on joebiden.com.
The tax changes may also apply to 403(b) accounts for employees of nonprofit organizations, universities and government and 457 accounts for state and local government employees. "At 26%, everybody is getting the same credit," says Matthew Schwartz, a financial advisor at Great Waters Financial in Minneapolis, Minnesota. The credit could be refundable, meaning that workers who don't earn enough for the credit to offset their income tax liability would still receive the value.


401(k)s for Workers Who Don't Have Access to One​

A significant portion of the workforce is not able to qualify for 401(k) tax breaks because a retirement plan is not provided by their employer. The Pew Charitable Trusts found that 35% of private sector workers over age 22 work for a company that does not offer a 401(k) retirement plan. Millennials (41%) are the least likely to have access to an employer-sponsored retirement plan, but over a third (35%) of Gen Xers and 30% of baby boomers are unable to take advantage of the tax benefits of a 401(k) plan.
The Biden administration is calling for the creation of an "automatic 401(k)" for those who don't have access to a retirement account through their job. "There are a lot of people not able to contribute to pensions or 401k(s)," Bibbo says. "(Biden's proposal) would create an automatic 401(k), which may be private-based or government-based. People who do not have access to a 401(k) now will have access to a 401(k) that they can contribute to and have contributions coming out of their paycheck."

Catch-Up Contributions for Caregivers​

Workers currently need to have earned income in order to be eligible to contribute to a 401(k) plan. Biden has proposed allowing caregivers to make catch-up contributions to retirement accounts, even if they are not earning a formal income.
These potential 401(k) changes signaled by the Biden campaign could significantly change the tax benefits of 401(k) plans and create new opportunities to save for retirement, especially for people who don't currently have access to a 401(k). These Biden 401(k) proposals are not current law and the structure of these potential 401(k) rules is subject to change.
ELI5 on tax deduction v. tax credit. Will this come out of a paycheck post-tax and then when you file taxes you get something back?
 

Alpha_Cock

A Real A Hole
Founder
Joined
Jan 11, 2021
Messages
238
ELI5 on tax deduction v. tax credit. Will this come out of a paycheck post-tax and then when you file taxes you get something back?
Yes. but like @dskurz points out. You may have a lower income tax withholding rate when your paycheck happens, and the tax credit will be at 26% (according to the existing proposal). It could potentially be good for many, until they fuck it up.
 

Rusty Strings

Leader
Joined
Jan 9, 2021
Messages
91
Yes. but like @dskurz points out. You may have a lower income tax withholding rate when your paycheck happens, and the tax credit will be at 26% (according to the existing proposal). It could potentially be good for many, until they fuck it up.
Well, lucky for me I'm pretty poorsinous. I still do not agree with it but it will benefit me. Until they change it again to make it even worse.
 

MittRomneysDrawers

Leader
Founder
Joined
Jan 15, 2021
Messages
50
I'd have to see the maths on how it benefits me. I pulled 100k last year saying (faking) I had Covid. Paid off my Truck and some other and my Bitcoin is now damn worth what I took out minus the truck. So at least I partied for free.

If I quit my company I'd have access to another 200k, plus 40k they own me in holiday wages. I could damn near sell my house with 200k equity, move to The Phils and bang young chicks for eternity. However since I max Social Security each year maybe waiting until 62 is better.
 

Monthly Donation Goal

  1. Campaign goal
    $47.17 of $500.00
Top Bottom