Author Topic: Republicans Consider Sharp Cut in 401(k) Contribution Limits  (Read 80778 times)

I'm a red panda

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #150 on: October 27, 2017, 07:36:40 AM »
I'd prefer elimination of income tax all together kill off a majority of the IRS as well as the large tax companies - who have huge lobbies so thats why this wont happen.  but movement to a sales tax based system eliminates many many loop holes people can jump thru to avoid taxes.
VAT all the way! Tax consumption and reward saving/investing. The gov't still wins in the end because money saved/invested eventually gets taxed via estate taxes or future spending.

Except they are getting rid of estate taxes.

dude

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #151 on: October 27, 2017, 07:36:51 AM »
I'm posting this separate from my last post because it is a completely different set of ideas.

While I benefit greatly from the 401k system, both personally(I max it out) and professionally(I work in investment management), I can see the benefit of switching the employee contributions to a Roth style system. The employer side should stay pre-tax, that is the incentive for the employer to do it. A Roth contribution doesn't benefit your employer, it only benefits you.

If we were starting from scratch, as opposed to editing an old entrenched tax system, we wouldn't include many of the things that are already in place. The USA(Universal Savings accounts) that have been proposed in the past make a lot of sense. Something that works like a Roth without the penalties and complex rules is much more simplified than what we have now. Why do we have a dozen different retirement plans, each with their own rules, and sometimes very very complicated conflicting rules?

Example: A Roth IRA has a 5 year limit before you can withdrawal earnings, and Roth 401ks also have a 5 year limit before you can withdrawal earnings. If you put $1 in a Roth IRA that starts your 5 year clock. If you put $18k/yr for 40 years into a Roth 401k, and then roll it into a brand new Roth IRA(never had one before) your 5 year clock has to restart. How does that make sense? It doesn't, but that is because adding the Roth IRA and the Roth 401k were two separate edits to the tax code and no one considered how they interact.

Many of us benefit from the 401k now, but if we were creating a new tax system from scratch would we include it? History lesson, 401ks were never expected to be main stream, and that is why their name is so odd. SEPs, SIMPLEs, Roth IRA, IRAs, Pensions, all have simple easy to remember names. 401ks are named after the section of the tax code, describing rules for profit sharing plans, that was used to create the plans. Section 401 - k.

Pre-tax contributions help you more and more the more income you have. They do benefit the upper middle class and the rich more than the lower middle class and the poor. If you are in the 10 or 15% bracket then a Roth is probably better. Once you get into the 33% bracket that is a harder argument. Pre-tax contributions also let you move your AGI which impacts a whole host of other things, effectively allowing people to manipulate the tax system to their own benefit. Example: I highly doubt that when they put the income limits for student loan deductibility in the 60k range they thought, "We don't want single people making 80k a year to benefit from this, UNLESS they are also contributing 18k/yr to their 401k and $3400/yr to their HSA. Then they most certainly can deduct student loan interest."

My point: while I benefit greatly from the current system, if I was creating a system from scratch this wouldn't be it. I don't know if the current proposals in Congress are a step in the right direction, because they haven't revealed them. These are just my thoughts on a better system.


Extra thoughts:  If you are maxing out your retirement account and you have a long time horizon, then Roth contributions are normally better "regardless" of income. The reason is that 18k in a Roth is effectively more money saved than 18k in a Trad. Comparing 10k in Roth to 13.3k in Trad turns into a fair mathematical comparison, and if your tax rate stays the same throughout life you will get similar answers, but if your tax rate falls at retirement the trad will look better and vice versa. However, if the accounts are maxed out the math gets complicated. 18k in a Roth VS 18k in a Trad+$5940 in taxable. Over the long term that taxable account drags down the overall after-tax performance. In 5 years it probably won't make a big difference. Over 40 years it's a different story and it makes the Roth look better even in extremes, like 33% bracket now and 15% in retirement. (This is just the math comparing Trad VS Roth. It doesn't take into account how pre-tax contributions affect AGI... which is another example of how complex our tax code is.)

The reason I bring that up, switching to USAs(a Roth w/o early w/d penalties) could help most Mustachians. Yes, we would lose our short term tax brakes, but we could benefit in the long term, and if the USAs don't have early withdrawal penalties then that removes the tax problems when retiring before 59 1/2. No more need for complex Roth conversion ladders.

The problem with going all Roth is there's a carrot but no stick.  People being people, they need a stick.  Early withdrawal penalties are that stick. Retirement savings is supposed to be for retirement, not a slush fund for buying new toys when the urge arises.

Scandium

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #152 on: October 27, 2017, 07:50:12 AM »
The median household income is around $55k. You where making 20% more than that by yourself, and that was 20 years ago?! You were certainly wealthier than that majority of the population. I'd say that qualify as "rich".
My records from that era indicate that my net worth was under $90K in 1997. That's under $140K in today's money. Is someone with $140K in assets today "rich"?

Do not confuse income with wealth. Income is, at best, the first derivative of wealth.

Well lets see.
https://www.fool.com/investing/general/2015/05/17/americans-average-net-worth-by-age-how-do-you-comp.aspx

At age <35 the average net worth is ~$7,000. Yet in your 20s you had a net worth equal to the average person at 55-64 years old (including home equity). And as boarder pointed out; in the 96th percentile of the population. Uhm, so yes I'd say the IMO you were/are rich. Are you going to argue that an income in the top 12% and top 4% in assets is not "rich"?

I don't think there's anything wrong with being rich. In fact personally I'm in pretty much the same situation as you. But I do think it's a problem when people in our situation refuse to acknowledge that were are among the fortunate few, and insisting we are just normal people struggling along, and worthy of government help in the form of tax cuts/benefits. It is possible to acknowledge hard work, but also fortunate circumstances.
(And even worse is the common extension of this where the same people fighting for their 401k and mortgage deduction saying poor people are lazy moochers and unworthy of help. You didn't say this, but it's pretty common.)


CheapScholar

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #153 on: October 27, 2017, 07:51:12 AM »
There are other problems with going Roth.  My top dollars earned right now are 25% bracket.  Even if the brackets are adjusted and my top dollars are 15%, I am incentivized to invest all I can in my pre-tax 401k or 403b because I know that even if the market underperforms, I'm winning right now.  Sure, I'll pay taxes someday when I withdraw but that's years away and ideally I'll be in lower bracket.

The other problem is that you're trusting the government to keep their word about NOT taxing Roth accounts and NOT pushing back the age you can withdraw on without penalty.  I'm 37.  I could easily see the government putting some taxes on Roth accounts before I'm 59.5.  Maybe not flat out income tax, but a percent or two to pay for whatever the noble cause will be in 20 years. 

Scandium

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #154 on: October 27, 2017, 08:07:45 AM »
The other problem is that you're trusting the government to keep their word about NOT taxing Roth accounts and NOT pushing back the age you can withdraw on without penalty. 

This is the same with a tax-deferred account too, not in any way unique to Roth. So I don't see that as an argument for one way or another. In that case the safest is probably to only invest after tax. In the Bahamas. In gold and bitcoin.

DarkandStormy

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #155 on: October 27, 2017, 08:11:05 AM »
Who has even said/reported that Roth 401k contributions would still exist?  $2,400 could be the limit to BOTH pre-tax and Roth contributions, no?

CheapScholar

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #156 on: October 27, 2017, 08:14:06 AM »
The other problem is that you're trusting the government to keep their word about NOT taxing Roth accounts and NOT pushing back the age you can withdraw on without penalty. 

This is the same with a tax-deferred account too, not in any way unique to Roth. So I don't see that as an argument for one way or another. In that case the safest is probably to only invest after tax. In the Bahamas. In gold and bitcoin.

True they could push back withdrawal age for traditional IRA or 401k, I concede that.  But I want my actual tax break now, not in the future.

boarder42

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #157 on: October 27, 2017, 08:27:18 AM »
Who has even said/reported that Roth 401k contributions would still exist?  $2,400 could be the limit to BOTH pre-tax and Roth contributions, no?

no this is incorrect. the original report on this said roth would still exist up to its current limit.

boarder42

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #158 on: October 27, 2017, 08:29:52 AM »
The other problem is that you're trusting the government to keep their word about NOT taxing Roth accounts and NOT pushing back the age you can withdraw on without penalty. 

This is the same with a tax-deferred account too, not in any way unique to Roth. So I don't see that as an argument for one way or another. In that case the safest is probably to only invest after tax. In the Bahamas. In gold and bitcoin.

True they could push back withdrawal age for traditional IRA or 401k, I concede that.  But I want my actual tax break now, not in the future.

you dont know that you'll even be getting a net tax break since tax brackets could double and you just deferred all of your taxes to a time when we have taxes equivalent to most of western europe.  There is no limit to hypotheticals one could propose to make anything look better one way or another .. you just have to go off of what we know to exisit now unless there is a great probability of a known change coming - which no one really can know. 

DarkandStormy

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #159 on: October 27, 2017, 08:44:45 AM »
Who has even said/reported that Roth 401k contributions would still exist?  $2,400 could be the limit to BOTH pre-tax and Roth contributions, no?

no this is incorrect. the original report on this said roth would still exist up to its current limit.

Thank you.  Too much back and forth and flip-flopping, I can't keep up.

sokoloff

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #160 on: October 27, 2017, 08:50:27 AM »
The median household income is around $55k. You where making 20% more than that by yourself, and that was 20 years ago?! You were certainly wealthier than that majority of the population. I'd say that qualify as "rich".
My records from that era indicate that my net worth was under $90K in 1997. That's under $140K in today's money. Is someone with $140K in assets today "rich"?

Do not confuse income with wealth. Income is, at best, the first derivative of wealth.

Well lets see.
https://www.fool.com/investing/general/2015/05/17/americans-average-net-worth-by-age-how-do-you-comp.aspx

At age <35 the average net worth is ~$7,000. Yet in your 20s you had a net worth equal to the average person at 55-64 years old (including home equity). And as boarder pointed out; in the 96th percentile of the population. Uhm, so yes I'd say the IMO you were/are rich. Are you going to argue that an income in the top 12% and top 4% in assets is not "rich"?
Ask 100 people off the street to define "rich". How many of them will make "for their age group" part of that definition or even mention it? My guess is fewer than 5, possibly 0.

If someone is in the top 4% of net worth (including home equity) in the US ($3MM USD), I agree they're "rich". (Believe it or not, you will get arguments against even that.)
If someone has $140K, they're barely above the median and I don't agree they're "rich", whether they're 2, 27, or 72 years old.

I am far from complaining about my situation and agree that I've been very fortunate to be good at and enjoy doing something that turns out be quite valuable to companies. I also tend to think that words tend to have established meanings and using the established meaning as the default is more efficient in discussions.

Scandium

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #161 on: October 27, 2017, 09:04:30 AM »
The median household income is around $55k. You where making 20% more than that by yourself, and that was 20 years ago?! You were certainly wealthier than that majority of the population. I'd say that qualify as "rich".
My records from that era indicate that my net worth was under $90K in 1997. That's under $140K in today's money. Is someone with $140K in assets today "rich"?

Do not confuse income with wealth. Income is, at best, the first derivative of wealth.

Well lets see.
https://www.fool.com/investing/general/2015/05/17/americans-average-net-worth-by-age-how-do-you-comp.aspx

At age <35 the average net worth is ~$7,000. Yet in your 20s you had a net worth equal to the average person at 55-64 years old (including home equity). And as boarder pointed out; in the 96th percentile of the population. Uhm, so yes I'd say the IMO you were/are rich. Are you going to argue that an income in the top 12% and top 4% in assets is not "rich"?
Ask 100 people off the street to define "rich". How many of them will make "for their age group" part of that definition or even mention it? My guess is fewer than 5, possibly 0.

Just because most people aren't capable of considering the distinctions doesn't make it invalid. If you asked people who's better off between a 90 year old with $250,000 or a 2 year old do you think they would say age mattered? Just from the power of compounding alone I would say it does.

Someone with your $140,000 retiring at age 67 is not in a especially good spot. That could be home equity alone in many cases
If you at age 27 invested that money you would have $2 million when you reach 67.

I'd say "for age group" is a pretty important distinction!

CheapScholar

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #162 on: October 27, 2017, 09:37:28 AM »
Boarder,

Sure, the hypotheticals are endless and we could have Western European style tax brackets when I start withdrawing.  But, for "mustashians" or people on this board, that risk is quite low.  Because even crazy Western European tax brackets don't tax to death people living on 30-40k per year.  If I pay off my house and build up my traditional 401k to about 750k (remind you of anyone?) and start withdrawing 30k per year, it's very unlikely I'd pay more than 10% income tax on any dollars. 

The truth is, if you're a family making between 100k-150k and you've had both spouses taking the full 18k pretax deduction, you've been dodging a lot of taxes.  This is the boat I'm in.  Rothifying 401k accounts will be a loss for me, unless they stick true to their plan of doubling the standard deduction and they ALSO set that 15% bracket very high. 

sokoloff

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #163 on: October 27, 2017, 09:41:06 AM »
Ask 100 people off the street to define "rich". How many of them will make "for their age group" part of that definition or even mention it? My guess is fewer than 5, possibly 0.
Just because most people aren't capable of considering the distinctions doesn't make it invalid.
But what people think a word means is a substantial part of the definition of the word.

What the dictionary says combined with what people understand a word to mean is what it means. (The dictionary is the low-pass filter on the population's usage of words, so you can't solely rely on the dictionary. In this case though, I argue there is no substantial difference in meaning across the broad population.)

Scandium

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #164 on: October 27, 2017, 09:54:52 AM »
Ask 100 people off the street to define "rich". How many of them will make "for their age group" part of that definition or even mention it? My guess is fewer than 5, possibly 0.
Just because most people aren't capable of considering the distinctions doesn't make it invalid.
But what people think a word means is a substantial part of the definition of the word.

What the dictionary says combined with what people understand a word to mean is what it means. (The dictionary is the low-pass filter on the population's usage of words, so you can't solely rely on the dictionary. In this case though, I argue there is no substantial difference in meaning across the broad population.)
Ok, so what is the definition of "rich". I honestly haven't checked. I'd guess something like "has more money and/or income than x% of the population?"

Even if you didn't have more than the general (much older) population at 27, due to compounding you will at some point, unless you throw it away. You're probably better off than 90% of people. So it doesn't really matter that much for our discussion here.
« Last Edit: October 27, 2017, 10:04:18 AM by Scandium »

sol

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #165 on: October 27, 2017, 09:58:46 AM »
Ask 100 people off the street to define "rich". How many of them will make "for their age group" part of that definition or even mention it? My guess is fewer than 5, possibly 0.

The problem here is that "rich" has always been a relative term like, "tall".  My four year old is tall, for her age, but she is still short.  My wife is tall, compared to all adult women on Earth, but she is still short compared to me.  I am 6'4" and think of myself as tall, but I am short for an NBA player.

So if you were to ask me "are you rich" or "are you tall" I can't really answer that question without providing some context.  Yea, I'm guess I'm pretty rich, but I'm not like RICH rich.  I know a ton of people who are waaaaaay more rich than I am, and my net worth is much closer to zero than it is to their net worth, so to them I am not rich.  A grown man who is 6'4" and a grown man who is 5'8" are almost indistinguishable to Manute Bol, who towers over both of us by more than a foot.  My daughter and her classmates are all short to me, despite having an acute sense of who among them is tallest.

So let's go easy on the "who is rich" question for a while.  The context absolutely matters, and I understand why people who are objectively far richer than average, compared to the planet as a whole, still feel financially insecure in America.

boarder42

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #166 on: October 27, 2017, 09:59:37 AM »
Boarder,

Sure, the hypotheticals are endless and we could have Western European style tax brackets when I start withdrawing.  But, for "mustashians" or people on this board, that risk is quite low.  Because even crazy Western European tax brackets don't tax to death people living on 30-40k per year.  If I pay off my house and build up my traditional 401k to about 750k (remind you of anyone?) and start withdrawing 30k per year, it's very unlikely I'd pay more than 10% income tax on any dollars. 

The truth is, if you're a family making between 100k-150k and you've had both spouses taking the full 18k pretax deduction, you've been dodging a lot of taxes.  This is the boat I'm in.  Rothifying 401k accounts will be a loss for me, unless they stick true to their plan of doubling the standard deduction and they ALSO set that 15% bracket very high.

I fully agree - and think trump will lose a ton of upper middle class voters. We're in the same income level range as you are. but for the general population as a whole we are outliers.  We're already set for life on this board so a few extra pennies here or there may not be the best for the general population ... you're saving 120k per year you dont reach FI that much faster with roth vs trad when you're saving at that level and spending 30k.

at the end of the day you too are furthering the point that i made this is a tax break for the rich(however you choose to define that) - you will be no worse off in life if it goes away.

I'm also just playing devils advocate here - i dont want the 401k limit to be reduced but it seems many are up in arms about emailing their senators and calling them.  who really cares. 

MrMoneySaver

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #167 on: October 27, 2017, 10:16:27 AM »
Quote
almost indistinguishable to Manute Bol

Completely indistinguishable, as he died several years ago :-)


teen persuasion

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #168 on: October 27, 2017, 10:30:22 AM »
Changing 401k limits hurts low income people who use EITC.  If this change were enacted, it would cost us close to $5k in lost credits (federal and state, because state is a percentage of federal credit), and maybe $2600+ in additional tax.  That would definitely slow down our path to FIRE, since I use those refunds to fund our Roth IRAs.

Some posters were of the opinion that simply eliminating the 401k altogether and increasing the IRA contribution limits would be good enough (may have been on another thread on this same topic).  This is also problematic for EITC eligible families.  Contributions thru payroll 401k lower AGI and line 7 wages (EITC tests both), but IRA contributions only lower AGI.  Thus IRAs are not equivalent and useless for EITC eligibility, unless some type of payroll deduction can be added.

I don't want to see the 401k limit get changed downward, and nothing against you, but this comment is a great example of why the tax code is too complicated and needs to be simplified.
I wholeheartedly agreed about the need for simplification, but do you honestly think that the current proposal actually accomplishes that?

NOPE.

The plan they all ran on, Paul Ryan's "Better Way" tax plan, would have been a giveaway to the rich but it also simplified the tax code. While I didn't agree with everything, specifically the top bracket %, most of it was a step in the right direction. That plan didn't call for weakening retirement plans. It actually called for expanding them with the creation of a new simplified retirement plan called a USA(Universal Savings account). It would act like a Roth without the penalties for early withdrawals.

The only way limiting 401ks to $2400 makes any sense is if they are trying to replace them with USA plans, but if that is the idea why don't they just say that? "We are removing all of your tax advantaged plans" sounds a lot worse than "we created a better simplified tax advantaged plan."

The Better Way tax plan also simplified capital gains taxation. Instead of LTCG having their own separate tax brackets the tax plan calls for LTCG being taxed at half of your normal rate. This ends up being pretty close to the current system

Source: https://abetterway.speaker.gov/_assets/pdf/ABetterWay-Tax-PolicyPaper.pdf

Agree that the current tax code is way too complicated because of constant tinkering around the edges leading to convoluted systems.  It does seem to be time to clean house, and intentionally redesign parts that have overlapping details and obvious holes.  The complication is that other areas, outside of federal taxation, have built their own evolving convoluted systems around bits and pieces of our current tax code - state tax systems, ACA credits, FAFSA education financial aid, student loan IBR, etc.

I don't get the impression they are truly redesigning the tax code to simplify it, but are looking for more places to tinker around the edges, to the benefit of certain groups, whoever they may be this time.  They have no idea of the cascading unintended consequences they will unleash, because everything is so interconnected.

It's making me remember my CS professors admonishing against global variables, and altering their values.  You never knew when some other part of a program might also use/alter that variable.  You also never knew when a future extension of the program might decide to "borrow" that convenient variable for something entirely unthinkable at design time.

DarkandStormy

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #169 on: October 27, 2017, 11:32:35 AM »
Emailed my Senators and HoR rep.  Will call next week when details are supposed to be out.

talltexan

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #170 on: October 27, 2017, 11:34:21 AM »
Thanks to a healthy dose of NC gerrymandering, my representative is a democrat . . . no need to call and pester his staff about it.

Both of my state's senators are Republicans, but they are clearly such jerky boys of huge proportion that I doubt either cares what we think. They care so little it makes me long for ole Jesse . . . which I never thought would happen.

Another NC person here. I called Burr so many times he sent me a printed letter through USPS. I always make sure to indicate I'm registered GOP so he knows I'll be voting in a primary.

I think it's going to be very difficult to separate him from Trump on any issue. His stump speech talks about how he made money in business before being in government: he styles himself as a "Mini-Trump", a business-background outsider who doesn't understand these Washington Politicians.

OurTown

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #171 on: October 27, 2017, 11:59:42 AM »
https://www.saveoursavings.org/from-congress

This is promising.  While it is not an outright declaration of opposition, they are singing the right tune on both sides of the aisle.

doneby35

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #172 on: October 27, 2017, 12:19:25 PM »
https://www.saveoursavings.org/from-congress

This is promising.  While it is not an outright declaration of opposition, they are singing the right tune on both sides of the aisle.

Looks good, I just used their template and sent a message to my dear senators who care deeply about my retirement savings.

OurTown

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #173 on: October 27, 2017, 12:21:26 PM »
I called again today.  Actually, there is a good pitch to be made whether you have R or D congress critters.

D = this is a tax on the middle class.
R = this is a tax on individuals trying to take personal responsibility for their retirement.

CheapScholar

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #174 on: October 27, 2017, 01:16:34 PM »
I called again today.  Actually, there is a good pitch to be made whether you have R or D congress critters.

D = this is a tax on the middle class.
R = this is a tax on individuals trying to take personal responsibility for their retirement.

Not really true considering GOP is writing the tax overhaul without Democratic consideration and does not need their support.  Calling your democratic congressman is about as good as calling your grandmother. 

OurTown

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #175 on: October 27, 2017, 01:18:34 PM »
My grandmothers are long dead and I have no D congress people.  So you're right, the experience would be similar.

boarder42

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #176 on: October 27, 2017, 01:18:42 PM »
I called again today.  Actually, there is a good pitch to be made whether you have R or D congress critters.

D = this is a tax on the middle class.
R = this is a tax on individuals trying to take personal responsibility for their retirement.

Not really true considering GOP is writing the tax overhaul without Democratic consideration and does not need their support.  Calling your democratic congressman is about as good as calling your grandmother.

shes a republican so its better right? b/c she may call her senator too.

sherr

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #177 on: October 27, 2017, 02:06:19 PM »
Thanks to a healthy dose of NC gerrymandering, my representative is a democrat . . . no need to call and pester his staff about it.

Both of my state's senators are Republicans, but they are clearly such jerky boys of huge proportion that I doubt either cares what we think. They care so little it makes me long for ole Jesse . . . which I never thought would happen.

Another NC person here. I called Burr so many times he sent me a printed letter through USPS. I always make sure to indicate I'm registered GOP so he knows I'll be voting in a primary.

I think it's going to be very difficult to separate him from Trump on any issue. His stump speech talks about how he made money in business before being in government: he styles himself as a "Mini-Trump", a business-background outsider who doesn't understand these Washington Politicians.

Burr has already explicitly declared that 2016 was going to be his last campaign. He could always go back on that, but I doubt it. So he probably doesn't care.

I'm a red panda

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #178 on: October 27, 2017, 02:12:57 PM »
https://www.saveoursavings.org/from-congress

This is promising.  While it is not an outright declaration of opposition, they are singing the right tune on both sides of the aisle.

Looks good, I just used their template and sent a message to my dear senators who care deeply about my retirement savings.

I highly recommend calling, or at the very least writing your own email.

They really don't care much about form letters.

I think most research shows that they care about 1) in-office visits 2)town halls (assuming they let you in...) 3)phone calls 4) letters 5)personal emails 6)form emails

Basically the easier it is to do, the less likely a senator is to care.

Of course, I'm of the opinion that they only care about 1)large contribution to campaign and 2) what party tells them to do.   But it doesn't prevent me from trying

CheapScholar

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #179 on: October 27, 2017, 02:16:47 PM »
Good God!!!  Now there is a new article quoting Kevin Brady (TX rep and main architect of the tax bill) saying GOPmay RAISE the deduction to $20,000.

https://www.cnbc.com/2017/10/27/rep-kevin-brady-says-lawmakers-considering-raising-401k-contribution-limit.html

Brady isn't being clear if this is pretax or includes Roth, but he (or the short article) is implying it doesn't include Roth.  The ping pong continues and it just gets weirder!

protostache

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #180 on: October 27, 2017, 02:23:05 PM »
I think the likelihood that this congress actually passes anything at all is pretty low at this point. I would be astounded if they accomplish anything other than a simple 10 year rate cut.

DavidAnnArbor

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #181 on: October 27, 2017, 02:23:14 PM »
The point of my statement is by in large the 401k benefits the rich/wealthy/high income earners of which you entirely fit into each of these categories so further proving the point regardless of if you want to admit you were that well off or not.

And getting rid of the 401k tax free investing except for $2,400 in order to free money up to provide tax cuts for the really rich, doesn't help the average or poor income worker.

Scandium

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #182 on: October 27, 2017, 02:23:25 PM »
Good God!!!  Now there is a new article quoting Kevin Brady (TX rep and main architect of the tax bill) saying GOPmay RAISE the deduction to $20,000.

https://www.cnbc.com/2017/10/27/rep-kevin-brady-says-lawmakers-considering-raising-401k-contribution-limit.html

Brady isn't being clear if this is pretax or includes Roth, but he (or the short article) is implying it doesn't include Roth.  The ping pong continues and it just gets weirder!
I put $50 on nothing changing.

CheapScholar

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #183 on: October 27, 2017, 02:27:05 PM »
If they double the standard deduction, lower the tax rates, and increase the pre-tax limit to 20K, my family (upper middle class by every definition) would basically be paying no federal income tax.  As a Republican who is more of a deficit hawk, I have to admit that would be totally fuct up.

MrMoneySaver

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #184 on: October 27, 2017, 02:37:03 PM »
I put $50 on nothing changing.

$50 pretax, or Rothified?

BTDretire

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #185 on: October 27, 2017, 05:21:36 PM »
Wouldn't the plan, if it ever came to pass, encourage Americans to save less in their 401k plans? And wouldn't Wall Street and its lobbyists hate that?

Only about 33% of workers take advantage of a 401k, of those, most are in the 3, 4, and 5, earnings quintile and also have much, much more in their accounts.
So the 401K helps the wealthy more than the poor, and the poor would have a hard time hitting the IRA cap.
https://peoplespolicyproject.org/2017/10/21/capping-401k-tax-benefits-is-generally-a-good-idea/

BTDretire

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #186 on: October 27, 2017, 05:27:51 PM »
I despise Trump with the heat of a thousand suns and I don't believe anything he says or tweets.  Nevertheless, I hope and pray that today's tweet means this particular stunt is really and truly dead on arrival.  For a married couple in the 25% marginal bracket that maxes out their his and hers 401(k), reducing the limit to $2,400 would be a $7,800 per year tax hit.  Yikes!
Fake news :-) you're not including the other changes to the tax code (if they happen). Lower tax rate, Increased standard deduction, child tax Credit, etc.
 But I'll admit, we have no idea, what we will have until it is passed, if it is passed.

ixtap

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #187 on: October 27, 2017, 05:31:33 PM »
Wouldn't the plan, if it ever came to pass, encourage Americans to save less in their 401k plans? And wouldn't Wall Street and its lobbyists hate that?

Only about 33% of workers take advantage of a 401k, of those, most are in the 3, 4, and 5, earnings quintile and also have much, much more in their accounts.
So the 401K helps the wealthy more than the poor, and the poor would have a hard time hitting the IRA cap.
https://peoplespolicyproject.org/2017/10/21/capping-401k-tax-benefits-is-generally-a-good-idea/

Woah: "The 50th percentile worker has $5,000 in their retirement accounts, while the 90th percentile worker has $274,000." That 50th percentile worker is in the 3rd quintile, which is our statistical middle class. These are the folks that these programs should be focused on helping.

We really need to get onboard with opt out programs, don't we?

BTDretire

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #188 on: October 27, 2017, 06:29:31 PM »
I'd prefer elimination of income tax all together kill off a majority of the IRS as well as the large tax companies - who have huge lobbies so thats why this wont happen.  but movement to a sales tax based system eliminates many many loop holes people can jump thru to avoid taxes.
VAT all the way! Tax consumption and reward saving/investing.
I would have liked the VAT in my saving years, not now that I'm nearing living off my nestegg.
No!
Quote
Except they are getting rid of estate taxes.
Doesn't that only affect estates over $5 million?

BTDretire

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #189 on: October 27, 2017, 06:51:42 PM »
If they double the standard deduction, lower the tax rates, and increase the pre-tax limit to 20K, my family (upper middle class by every definition) would basically be paying no federal income tax.  As a Republican who is more of a deficit hawk, I have to admit that would be totally fuct up.
Yes, I'm soothing my pain with liquor after only paying $872 in federal income tax on a $108,000 income. And, I also over paid my quarterlies by $6,800. I aquired some deductions that I didn't plan for. Two kids and college expense credits.
 Another sip and my pain will be gone :-)

doneby35

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #190 on: October 27, 2017, 08:37:31 PM »
If they double the standard deduction, lower the tax rates, and increase the pre-tax limit to 20K, my family (upper middle class by every definition) would basically be paying no federal income tax.  As a Republican who is more of a deficit hawk, I have to admit that would be totally fuct up.
Yes, I'm soothing my pain with liquor after only paying $872 in federal income tax on a $108,000 income. And, I also over paid my quarterlies by $6,800. I aquired some deductions that I didn't plan for. Two kids and college expense credits.
 Another sip and my pain will be gone :-)

How in the hell are you paying $872 in federal income tax on a $108,000 income? is that because of kids and college expenses? I am nowhere paying that low, even with 401k, HSA and tIRA deductions.

doggyfizzle

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #191 on: October 27, 2017, 08:55:14 PM »
If they double the standard deduction, lower the tax rates, and increase the pre-tax limit to 20K, my family (upper middle class by every definition) would basically be paying no federal income tax.  As a Republican who is more of a deficit hawk, I have to admit that would be totally fuct up.

Have you factored in the loss of your $4050 personal exemptions per person that you will lose under the proposed tax plan?

Zamboni

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #192 on: October 27, 2017, 10:01:50 PM »
Wouldn't the plan, if it ever came to pass, encourage Americans to save less in their 401k plans? And wouldn't Wall Street and its lobbyists hate that?

Only about 33% of workers take advantage of a 401k, of those, most are in the 3, 4, and 5, earnings quintile and also have much, much more in their accounts.
So the 401K helps the wealthy more than the poor, and the poor would have a hard time hitting the IRA cap.
https://peoplespolicyproject.org/2017/10/21/capping-401k-tax-benefits-is-generally-a-good-idea/

Woah: "The 50th percentile worker has $5,000 in their retirement accounts, while the 90th percentile worker has $274,000." That 50th percentile worker is in the 3rd quintile, which is our statistical middle class. These are the folks that these programs should be focused on helping.

We really need to get onboard with opt out programs, don't we?

Yes, I agree that employee sponsored enrollments should be opt out, not opt in. Research shows that almost no one will opt out (of anything) if it requires separate paperwork. The default should be the age-appropriate target date funds with low fees. That change alone would make a big difference for a whole bunch of workers.

Undecided

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #193 on: October 27, 2017, 10:27:40 PM »
So people who upset about this, are you going to call/write your congressperson?  Or just complain here?

I have a Republican representative, in an otherwise solidly “blue” state (with a high state income
tax)—I’ve written, but I think he’s pretty confident he can curry favor with both Trump and the mainstream Republicans and package it for the voters who send him to D.C. (against their own real interests, if you ask me).

Undecided

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #194 on: October 27, 2017, 10:42:59 PM »

But I think people in my income range need to pay more taxes.  I've said it many times.  If by paying more taxes, it means my friends can get health care/ insurance, I'll pay more taxes.

Your tax increases will pay for cuts for hedge fund managers and/or “defense” spending.

My combined federal and stage income taxes and federal payroll taxes will be around 43% this year. I haven’t been calling for tax cuts, but I think it’s absurd that any proposal would have me pay anything more while billionaires and “pass through” business owners get cuts

SubL stache

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #195 on: October 28, 2017, 06:39:15 AM »
If they cut the 401k limits I will start kneeling when the national anthem plays.

boarder42

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #196 on: October 28, 2017, 07:12:57 AM »
If they cut the 401k limits I will start kneeling when the national anthem plays.

Shrinking protected lands would make me kneel not a few dollars.

StarBright

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #197 on: October 28, 2017, 07:15:23 AM »
I called again today.  Actually, there is a good pitch to be made whether you have R or D congress critters.

D = this is a tax on the middle class.
R = this is a tax on individuals trying to take personal responsibility for their retirement.

This is the tack I took in my email and phone call to my rep. I basically said "look, we keep our heads down and we follow all the "rules" to not be a drain on society*: college, pay off college loans, save up for down payment on our house, have children when financially stable and now that our oldest is finally in kindergarten we want to use that extra child care money to save a little more in our 401ks. Why are we hearing rumors that you guys are changing the rules on us? Why do you want to make it even harder for us to save for retirement?

 *just want to insert a note that I was trying to speak their language, I don't actually think of down on their luck folks as a "Drain."

The girl I talked to was like "uhh, yeah, uh . . . I know. I will pass your message on to the congressman"

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CheapScholar

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Re: Republicans Consider Sharp Cut in 401(k) Contribution Limits
« Reply #199 on: October 28, 2017, 08:29:04 AM »
If they double the standard deduction, lower the tax rates, and increase the pre-tax limit to 20K, my family (upper middle class by every definition) would basically be paying no federal income tax.  As a Republican who is more of a deficit hawk, I have to admit that would be totally fuct up.

Have you factored in the loss of your $4050 personal exemptions per person that you will lose under the proposed tax plan?

I have not.  Only have 1 child.  I'm not going to do any detailed analysis until I see where the brackets fall.  Plus, the latest reports now suggest that the 20K for 401(k)s is the sum of the traditional and the Roth.  Where that breakdown occurs is huge obviously.  If the traditional is $2,400 I'm paying taxes.  If it's closer to $10,000 or $15,000 I'll probably have a very low tax liability.  I'd really hate to see the traditional deduction go below $10,000.