WSJ: There’s talk of capping 401(k) contributions at $2,400 per year .....

[kelly1mm]

This could be a game changer .......

http://www.marketwatch.com/story/theres-talk-of-capping-401k-contributions-at-2400-per-year-2017-10-20

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.

Members of the House Ways and Means Committee are widely expected to release a version of the tax bill by mid-November. Specifics on a wide range of issues remain unclear. Emily Schillinger, a spokeswoman for the Ways and Means Committee, declined to comment.

Lobbyists and others in the retirement and financial services industries who have spoken to congressional staff and committee members say lawmakers are looking at proposals that would allow 401(k) participants to contribute significantly less than what is currently allowed in a traditional tax-deferred 401(k). An often mentioned amount is $2,400 a year. It isn’t clear whether that would only apply to 401(k)s or IRAs or both.

[ixtap]

Because fuck the middle class?

Seems like just yesterday I was reading reports about the retirement crisis.

[NathanP]

The idea is to limit pretax 401k contributions to a lower number, but still to allow for 401k Roth contributions that would be taxed in the current year. Although I appreciate (and maximize) my traditional 401k contribution, it cannot be argued that the government misses out on current-year tax income. For those of us pursuing ER, that is the whole point!

[JumpInTheFIRE]

This is outrageous.  Along with eliminating deductions for state taxes, eliminating the AMT, eliminating the estate tax, and eliminating the personal exemption, this whole plan is designed to screw the middle class to give a tax break to the ultra-rich.  I didn't expect any different from the current administration as it is jam-packed with people who benefit from this plan but usually the screwing of the middle class is a little more subtle.  For anyone who saves a lot of money in their 401k this will raise their tax bill by thousands of dollars.  What an irony that the party that preaches "personal responsibility" is looking to punish people who take responsibility for their own retirement while giving even more money to the people who need it the least. 

[chasesfish]

For every deduction that's threatened, there are ten lobbyists ready to fight it...

As for me as a taxpayer, it'd depend on my new rate, level of deductions, ect to determine if it actually costs me any money.  Devil is in the details.  Remember that those of us who "save" are inherently a member of the investor class and receive the same benefits and costs as the "rich" often demonized.   

[Ocinfo]

Just wait for employer contributions to be considered taxable income. Would likely make billions more dollars taxable.


Sent from my iPhone using Tapatalk

[Paul der Krake]

At the risk of being mistaken for a Trump supporter, there's nothing middle class about the 401(k). Only 1 in 3 Americans contributes to one, and the vast majority have a pathetic balance.

[maizefolk]

If it happens, it happens. I won't be thrilled about it, but I'm willing to give up some complicated tax provisions that benefit me if it means lots of other people are giving up their complicated tax provisions as well.

Also note that this entire story is a big nothingburger that boils down to "congress has not explicitly denied that they might reduce the maximum contribution to 401k plans at some point in the future." 

[NorCal]

Don't pay too much attention to this stuff, particularly the "OMG, they're taking a tax cut away" hysterics.

Due to obscure procedural rules, Congress is going through the motions to pass a "tax cut" while being under the restriction of not being able to reduce the amount of money the government collects.  If this sounds ridiculous, well, this is Congress.

They're currently looking at any type of deduction that can be reduced in order to lower tax rates as a whole. 

I did the math on the first few proposals with specific numbers.  My taxes would change by less than 5%, and I'm not sure if it would go up or down (I'd lose a deduction, but not get hit by the AMT)  You'd likely end up in a similar place, as that's kind of the point of the whole exercise.

[JumpInTheFIRE]

If it happens, it happens. I won't be thrilled about it, but I'm willing to give up some complicated tax provisions that benefit me if it means lots of other people are giving up their complicated tax provisions as well.

Also note that this entire story is a big nothingburger that boils down to "congress has not explicitly denied that they might reduce the maximum contribution to 401k plans at some point in the future."

But the rich aren't giving up their complicated tax provisions.  They still will have their family trusts and carried interest rule and interest deductions for their second home and favorable capital gains rates and new low income rates and no estate tax and no AMT and writing off their company's losses on their personal returns and the thousands of other loopholes that THEY have lobbied to have enacted into law.  Meanwhile, poor W-2 schlubs lose their 401k deductions, their child deductions, their state tax deductions and their mortgage interest deductions (since they no longer have enough deductions to itemize).  Doesn't sound like a nothingburger to me, it sounds like I will be paying 40-50% more in taxes so that Trump and his cronies can add to piles of money that are already larger than they could possibly spend in 10 lifetimes. 

You're right that Congress has not yet acted on this, but it seems like a classic example of windowing, they plant stories in the press about a radical change in retirement accounts then as the tax package is negotiated they will "only" reduce the contribution limit to $5000 and act like they are doing us a big favor by not dropping it to $2400.  We'll see what kind of tax bill actually gets passed but most of the things they have floated so far either mostly or exclusively benefit the rich.

[maizefolk]

If it happens, it happens. I won't be thrilled about it, but I'm willing to give up some complicated tax provisions that benefit me if it means lots of other people are giving up their complicated tax provisions as well.

Also note that this entire story is a big nothingburger that boils down to "congress has not explicitly denied that they might reduce the maximum contribution to 401k plans at some point in the future."

But the rich aren't giving up their complicated tax provisions.  They still will have their family trusts and carried interest rule and interest deductions for their second home and favorable capital gains rates and new low income rates and no estate tax and no AMT and writing off their company's losses on their personal returns and the thousands of other loopholes that THEY have lobbied to have enacted into law.  Meanwhile, poor W-2 schlubs lose their 401k deductions, their child deductions, their state tax deductions and their mortgage interest deductions (since they no longer have enough deductions to itemize).  Doesn't sound like a nothingburger to me, it sounds like I will be paying 40-50% more in taxes so that Trump and his cronies can add to piles of money that are already larger than they could possibly spend in 10 lifetimes. 

To clarify, I wasn't saying that cutting the maximum 401k contribution would be a nothingburger if someone actually tried to do it, just that this article's only evidence it is even on the table is that the idea hasn't been officially denied (just like 99% of the rumors out there on any topic). By that standard I could write a news article about the government's plan to ship unwed mothers to Mars. After all no one in congress has officially denied that such a plan exists.

Now about what taxes benefit who: I don't know about you specifically, but I benefit quite a lot from favorable tax treatment of capital gains and dividends and I'm guessing a lot of other MMMers do as well.

My pet theory is that the swap between an increased standard deduction and elimination of personal exemptions (good for single people and couples few children, bad for families that decide to have lots of children) was intended to punish the one usually reliably conservative group that didn't rally behind Trump in the general. (Remember that Mormons never really warmed to Trump and for quite a while it looked like McMullen might actually win Utah's electoral votes.) But I don't really have a dog in that fight so *shrug.*

[human]

Canadian here. I always thought a 401k was like an rrsp. If you got rid of the tax advanatge of investing one whats the fucking point of using one at all? 2,400 is a joke. This must be fear mongering no? They can't be that stupid can they?

[marty998]

Canadian here. I always thought a 401k was like an rrsp. If you got rid of the tax advanatge of investing one whats the fucking point of using one at all? 2,400 is a joke. This must be fear mongering no? They can't be that stupid can they?

Wouldn't put it past them.

Do presidential candidates not have to have a policy platform over there? How can you get voted into office without laying out your policies and then one year in spring these plans on an unsuspecting electorate and say "hey, here's this pile of shit we're going to make you all eat"

[I'm a red panda]

Canadian here. I always thought a 401k was like an rrsp. If you got rid of the tax advanatge of investing one whats the fucking point of using one at all? 2,400 is a joke. This must be fear mongering no? They can't be that stupid can they?

Wouldn't put it past them.

Do presidential candidates not have to have a policy platform over there? How can you get voted into office without laying out your policies and then one year in spring these plans on an unsuspecting electorate and say "hey, here's this pile of shit we're going to make you all eat"

The party has a platform, but they are pretty much free to do whatever they want with no regard to what they said.

[frugalecon]

Especially if you live in a Congressional district represented by a Republican or have a Republican Senator, you might want to call your rep’s offices or fax a letter to him/her. They actually do track that stuff. Tell them they will lose your vote permanently if they pass that into law.

[ketchup]

Sure, giving people less of an incentive to save for retirement couldn't possibly have unintended consequences...

I don't think this'll happen, but I also didn't think Trump would be elected.

[chasesfish]

I've chosen to restrain from forming any outrage until I know what my new personal tax rate is and could spreadsheet the consequences to me.

[TempusFugit]

I agree with the point made by a couple of others that this is all just talk right now and we shouldn't get too agitated.   Even if seomthing like this eventually is part of some package we still have to consider all the other aspects of any reform such as deductions and rates before we can really judge the overall impacts. 

As far as how many people would actually be impacted by just this specific idea of limiting the 401k contributions, I would speculate that as a percentage, very few middle class workers would be impacted because most people don't contribute at all, and of those who do the majority do only the minimum to get any employer match.  With the average income of about 50k or so, this 2.4k number is probably covers the majority. 

I'm not saying I like this idea, mind you.   

[ketchup]

I agree with the point made by a couple of others that this is all just talk right now and we shouldn't get too agitated.   Even if seomthing like this eventually is part of some package we still have to consider all the other aspects of any reform such as deductions and rates before we can really judge the overall impacts. 

As far as how many people would actually be impacted by just this specific idea of limiting the 401k contributions, I would speculate that as a percentage, very few middle class workers would be impacted because most people don't contribute at all, and of those who do the majority do only the minimum to get any employer match.  With the average income of about 50k or so, this 2.4k number is probably covers the majority. 

I'm not saying I like this idea, mind you.

Gah, spot on.  My employer match percentage times my current income is actually exactly $2,400 ($40k * 6%).  That's not creepy or anything.

[Paul der Krake]

As far as how many people would actually be impacted by just this specific idea of limiting the 401k contributions, I would speculate that as a percentage, very few middle class workers would be impacted because most people don't contribute at all, and of those who do the majority do only the minimum to get any employer match.  With the average income of about 50k or so, this 2.4k number is probably covers the majority. 

That's exactly it.

Vanguard has a bunch of research that shows that most people contribute around 3-5%, which happens to be usually either the default match or default enrollment number.

In other news, contribution limits for 2018 are going up to $18,500. Go IRS!

[bacchi]

As far as how many people would actually be impacted by just this specific idea of limiting the 401k contributions, I would speculate that as a percentage, very few middle class workers would be impacted because most people don't contribute at all, and of those who do the majority do only the minimum to get any employer match.  With the average income of about 50k or so, this 2.4k number is probably covers the majority. 

That's exactly it.

Vanguard has a bunch of research that shows that most people contribute around 3-5%, which happens to be usually either the default match or default enrollment number.

In other news, contribution limits for 2018 are going up to $18,500. Go IRS!

The Vanguard research* also shows that the % contributed increases as people age. The 55-64 group contributes 8.7%, probably as a last ditch effort before they retire. The 65+ age group contributes 10%.

Even assuming that these 55+ workers make the median salary, they'd be hobbled by the $2500 cap just when they need it the most. At best, it would be mean an even larger decline in standard of living; at worst, it would make a large voting bloc that would vote themselves SS raises.

$18500 may overly benefit the upper-middle class but $2500 is simply too low.


* The lowest % contribution I see 4.4% for someone making <$30,000.

[I'm a red panda]

Is there any word on how this is proposed to effect employer contributions.

Because while I'm only required to put $1200 in, they give me almost $11k. My compensation would change drastically if that was limited.

[dresden]

That would really suck for gen x in the prime earning years.   It’s a way to finance the tax cut for the wealthy and nothing more.  My company doesn’t offer Roth 401k at the moment and at 51 I prefer the tax break now.  I hope the billionaires enjoy the savings they are getting at my expense.

[OurTown]

His Trumpiness just tweeted there will be "no change" to your 401(k).  FWIW.

[I'm a red panda]

His Trumpiness just tweeted there will be "no change" to your 401(k).  FWIW.

Knowing he is a man of his word, I'm SO reassured here.

[OurTown]

http://www.foxnews.com/politics/2017/10/23/trump-knocks-down-reports-big-401-k-squeeze-in-gop-tax-plan-no-change.html

If it's on Fox News, it has to be true!

[cats]

At the risk of being mistaken for a Trump supporter, there's nothing middle class about the 401(k). Only 1 in 3 Americans contributes to one, and the vast majority have a pathetic balance.

This was pretty much my reaction.  I know maxing out your 401(k) is relatively common on this board, but it's not that common across the general population.  I know of more than one relatively high earning family who either doesn't max out their 401(k) or doesn't consistently max it out.  And I do think you need to be making more than the median household income for maxing out to be a realistic goal.  Maybe $2400 is too low, but the current limits definitely benefit the upper middle class or wealthy earners more than the lower and middle middle class.  And changing the cap would have no impact at all on the many, many Americans who don't have access to a 401(k) at all.

It would suck for me personally, but for the general population, I'm not sure this is actually such an awful proposal.  Though given how minimal contributions to 401(k) really are for most people, I do wonder just how much additional revenue the proposed cap would really create.

[electriceagle]

Due to obscure procedural rules, Congress is going through the motions to pass a "tax cut" while being under the restriction of not being able to reduce the amount of money the government collects.  If this sounds ridiculous, well, this is Congress.

They're currently looking at any type of deduction that can be reduced in order to lower tax rates as a whole. 

If there's going to be a tax cut for the ultra-wealthy, there has to be a tax increase for the middle class. Can't raise taxes on the poor since they don't have anything to take (simplifying).

[dude]

This is outrageous.  Along with eliminating deductions for state taxes, eliminating the AMT, eliminating the estate tax, and eliminating the personal exemption, this whole plan is designed to screw the middle class to give a tax break to the ultra-rich.  I didn't expect any different from the current administration as it is jam-packed with people who benefit from this plan but usually the screwing of the middle class is a little more subtle.  For anyone who saves a lot of money in their 401k this will raise their tax bill by thousands of dollars.  What an irony that the party that preaches "personal responsibility" is looking to punish people who take responsibility for their own retirement while giving even more money to the people who need it the least.

More specifically, it's designed to screw the educated class -- professionals like doctors, lawyers, engineers, teachers, etc. -- who were not strong supporters of Trump in the last election.

[dude]

I agree with the point made by a couple of others that this is all just talk right now and we shouldn't get too agitated.   Even if seomthing like this eventually is part of some package we still have to consider all the other aspects of any reform such as deductions and rates before we can really judge the overall impacts. 

As far as how many people would actually be impacted by just this specific idea of limiting the 401k contributions, I would speculate that as a percentage, very few middle class workers would be impacted because most people don't contribute at all, and of those who do the majority do only the minimum to get any employer match.  With the average income of about 50k or so, this 2.4k number is probably covers the majority. 

I'm not saying I like this idea, mind you.

Couldn't disagree more.  If you just sit back and wait and see what happens, the worst is likely to happen.  However, if you get on the phone and the e-mail and give your elected representatives a piece of your mind, especially if they are GOP, you might have a chance of forcing these criminals to refrain from fucking you in the ass.

[OurTown]

As things stand now (fingers crossed) it looks like tax reform will be a wash for us.  We itemize, but we are just barely above the standard deduction.  So doubling the standard deduction and eliminating the exemptions, with some tinkering with the marginal rates, will probably bring us back close to where we are now.

[facepalm]

As far as how many people would actually be impacted by just this specific idea of limiting the 401k contributions, I would speculate that as a percentage, very few middle class workers would be impacted because most people don't contribute at all, and of those who do the majority do only the minimum to get any employer match.  With the average income of about 50k or so, this 2.4k number is probably covers the majority. 

That's exactly it.

Vanguard has a bunch of research that shows that most people contribute around 3-5%, which happens to be usually either the default match or default enrollment number.

In other news, contribution limits for 2018 are going up to $18,500. Go IRS!

So then what would be the point of the policy change? If few contribute more than $2,400, the revenue gain would be minimal. It just makes no sense.  (you are not arguing that point, I am aware).

This is outrageous.  Along with eliminating deductions for state taxes, eliminating the AMT, eliminating the estate tax, and eliminating the personal exemption, this whole plan is designed to screw the middle class to give a tax break to the ultra-rich.  I didn't expect any different from the current administration as it is jam-packed with people who benefit from this plan but usually the screwing of the middle class is a little more subtle.  For anyone who saves a lot of money in their 401k this will raise their tax bill by thousands of dollars.  What an irony that the party that preaches "personal responsibility" is looking to punish people who take responsibility for their own retirement while giving even more money to the people who need it the least.

More specifically, it's designed to screw the educated class -- professionals like doctors, lawyers, engineers, teachers, etc. -- who were not strong supporters of Trump in the last election.

It will also screw fund managers, brokers, and banks. You know . . . Wall Street.

[Paul der Krake]

As far as how many people would actually be impacted by just this specific idea of limiting the 401k contributions, I would speculate that as a percentage, very few middle class workers would be impacted because most people don't contribute at all, and of those who do the majority do only the minimum to get any employer match.  With the average income of about 50k or so, this 2.4k number is probably covers the majority. 

That's exactly it.

Vanguard has a bunch of research that shows that most people contribute around 3-5%, which happens to be usually either the default match or default enrollment number.

In other news, contribution limits for 2018 are going up to $18,500. Go IRS!

So then what would be the point of the policy change? If few contribute more than $2,400, the revenue gain would be minimal. It just makes no sense.  (you are not arguing that point, I am aware).

Few people max in relative numbers, but in absolute numbers, it's still millions of taxpayers who suddenly pay 3-4k in taxes now instead of later (or ever). Nothing to sneeze at.

[Telecaster]

I've chosen to restrain from forming any outrage until I know what my new personal tax rate is and could spreadsheet the consequences to me.

What fun is that?  :)

I think it is worth speaking up about though.  The 401(k) is at its core middle income tax break.  For each plan, the contributions for the highly compensated employees can't exceed (by much) the contributions for the lower level employees.  The whole point is that it can't be used just for rich folks, the company has to figure out a way to bring in the regular folks too. 

What Congress is proposing is limited the regular 401(K) part, and kicking the rest to a Roth 401(K).  As has been discussed in the various traditional vs. Roth threads, traditional is the better way to go, for most people. 

From a public policy perspective, I don't think this is a good idea.  As documented many times on these boards, we are facing a retirement crisis.  Not enough people have enough savings.   Part of the appeal of the 401(K) is that you get the deduction right now.  It is easier to save.  I don't know how taking that deduction away will affect things, but I suspect it won't be beneficial. 

But there is another problem here.  Doing this would raise more tax money right now, but raise less money in the future, creating a problem for some future Congress.  That's not good governance.  It might win short term votes, but it isn't good leadership and it isn't a good way to organize the nation's affairs. 

I approve of your policy of not being outraged until there is something to be outraged about.  But we should be at least concerned.  This is bad public policy and we deserve better from our elected officials. 

[rpr]

It would suck for me personally, but for the general population, I'm not sure this is actually such an awful proposal.  Though given how minimal contributions to 401(k) really are for most people, I do wonder just how much additional revenue the proposed cap would really create.

It can save couple hundred billion each year in tax expenditures.

http://www.taxpolicycenter.org/briefing-book/how-large-are-tax-expenditures-retirement-saving

IMO, this is something that disproportionately benefits higher income people (except ultra frugal Mustachians).  Even though not all high earners max out 401k accounts, a larger percentage of those who max it have higher incomes > 100K. See Figure 36 on p.37 of the following Document:

https://pressroom.vanguard.com/nonindexed/How-America-Saves-2017.pdf

Income    % Maxing contributions
<$30,000                 1
$30,000–$49,999     3
$50,000–$74,999     4
$75,000–$99,999     7
$100,000+             32

That document is quite an interesting read. While it is only based on Vanguard accounts, nonetheless it is illuminating.

Even if this were tax deduction was eliminated, resourceful Mustachians and high earners would be just fine. 

[JumpInTheFIRE]

It can save couple hundred billion each year in tax expenditures.

http://www.taxpolicycenter.org/briefing-book/how-large-are-tax-expenditures-retirement-saving

Not really.  From your link, the tax expenditure for defined contribution plans are more on the order of $100 billion, not a couple.  As is observed elsewhere in this thread, most people's contributions are fairly small so the additional revenue would be a fraction of that total if there is still a $2,400 limit as many contributors would be below or near that limit.  The real revenue increase would probably be around $50-$60 billion. 

Trump's tax plan is estimated to cost $5.8 TRILLION over 10 years, so they need an extra $580 billion per year for this to be deficit neutral (which it needs to be, since they are planning on using reconciliation rules to pass it).  The current plan seems to be claiming that lower taxes will jump start the economy so much that it will increase revenues but as the tax cuts in Kansas showed, it doesn't really work that way.  These cuts need to be paid for somehow and politicians refuse to cut the size of government (even the supposed "small government Republicans") so additional revenue will need to come from somewhere.  So far it seems like the bulk of that is going to rest on the middle class (no child deductions, no state tax deduction which will basically eliminate all itemized deductions for middle income people) so that the wealthy can get lower marginal rates, not pay estate taxes and no longer be subject to the AMT.  Good thing Trump is looking out for the little guy instead of his wealthy cronies!

[DavidAnnArbor]

Trump's tax plan is estimated to cost $5.8 TRILLION over 10 years, so they need an extra $580 billion per year for this to be deficit neutral (which it needs to be, since they are planning on using reconciliation rules to pass it). 

95% of that $5.8 trillion goes to those who earn over 400,000 a year

[apricity22]

I agree that this is just talk now, but if people don't get outraged, it quietly gets passed, people get used to the new normal and we get stuck with it for awhile. Therefore, if you are outraged you should make yourself heard.

Whatever bad system we emerge with, I feel like the early retirement community will figure out the workarounds and make the best of whatever system we get. Essentially, we are doing that now, the system isn't perfect but we have it better than most humans in history and we make the best of that.

It's a little bit harder to remain optimistic with these latest tax proposals which at worse screw the middle class and at best throw the middle class some scraps so they don't complain as loudly about this cash grab scheme for high income earners.

[dresden]

And 401k reductions still a possibility...

http://nypost.com/2017/10/25/401ks-still-on-the-table-despite-trumps-vow-to-keep-limits/

[Bojack]

Who exactly would he be negotiating with? I think his enemies would be willing to let him take the bullet on this one.

[ixtap]

Thaler has suggested a 10% deferral. I could get behind that with a cap.

[Undecided]

Thaler has suggested a 10% deferral. I could get behind that with a cap.

Absolutely.

Assuming the cap is at least $18k/year, adjusted for inflation.

[SnufferBottle]

Any decision to cap 401k contributions will surely result in more revenue in the short term - but 40 years from now we'll see a crisis like never before with elderly folks that can't support themselves.

Hard enough to get people to save for retirement now, at least with a traditional 401k people get that tax break to make it feel worthwhile.

I'd personally be pissed because my 401k is the fastest/easiest way to grow required reserves for getting additional mortgages for investment properties. I get the tax benefit for that year, and full pre-tax amount counts as 70% towards reserve.

[facepalm]

Any decision to cap 401k contributions will surely result in more revenue in the short term - but 40 years from now we'll see a crisis like never before with elderly folks that can't support themselves.

Not only that . . . think of the long-term revenue they are giving up.

[rockeTree]

Any decision to cap 401k contributions will surely result in more revenue in the short term - but 40 years from now we'll see a crisis like never before with elderly folks that can't support themselves.

Hard enough to get people to save for retirement now, at least with a traditional 401k people get that tax break to make it feel worthwhile.

Yeah but 40 years from now all the boomers will be dead and as long as the ladder gets pulled up after they’re on it and not before DC don’t give a proverbial flying fuck through a rolling doughnut. Me generation gotta get theirs at all costs.

[wenchsenior]

Any decision to cap 401k contributions will surely result in more revenue in the short term - but 40 years from now we'll see a crisis like never before with elderly folks that can't support themselves.

Hard enough to get people to save for retirement now, at least with a traditional 401k people get that tax break to make it feel worthwhile.

Yeah but 40 years from now all the boomers will be dead and as long as the ladder gets pulled up after they’re on it and not before DC don’t give a proverbial flying fuck through a rolling doughnut. Me generation gotta get theirs at all costs.

And from a GOP perspective, a funding crisis down the road will be the perfect excuse to slash the social safety net, entitlement programs, etc.  It's WIN-WIN.

[zoro]

so the way i read the proposal was a limit of $2400, but $18000 for post tax contributions.
this is similar to what im doing anyway with a Roth 401k. the company match is pretax, but i put in $18000 post tax
it compounds tax free and then i withdraw it tax free.  so while the law would remove flexibility it wont affect people who are
already doing a roth.  i do the roth as i think tax rates will be higher in the future.

[dude]

so the way i read the proposal was a limit of $2400, but $18000 for post tax contributions.
this is similar to what im doing anyway with a Roth 401k. the company match is pretax, but i put in $18000 post tax
it compounds tax free and then i withdraw it tax free.  so while the law would remove flexibility it wont affect people who are
already doing a roth.  i do the roth as i think tax rates will be higher in the future.

Exactly the point made above -- a bump in revenue for the Treasury today, a huge deficit in the future, especially considering Roths do not have RMDs, and are transferable to beneficiaries (think about compound interest here). A universal Roth would crush tax revenues down the road, which, as another commenter pointed out, may just be the point because the GOP has wanted to kill Social Security and Medicare for decades.  This will be their best opportunity, and they'll finally get the dog-eat-dog Third World style two-class (rich and poor) system they've been longing for. What these assholes are trying to do is preposterously fucked and profoundly cynical. I hope we one day isolate the greed gene and genetically modify it out of human DNA.

[NathanP]

so the way i read the proposal was a limit of $2400, but $18000 for post tax contributions.
this is similar to what im doing anyway with a Roth 401k. the company match is pretax, but i put in $18000 post tax
it compounds tax free and then i withdraw it tax free.  so while the law would remove flexibility it wont affect people who are
already doing a roth.  i do the roth as i think tax rates will be higher in the future.

I see two flaws with this strategy:

1. Tax rates on lower income people (and retirees living the MMM lifestyle) will almost certainly not go up much. It is unlikely that the current 10 and 15% brackets will ever exceed the 25%+ bracket that many of us pay into today.

2. What prevents the US from implementing a VAT style sales tax that would directly impact your Roth funds? I can imagine future income tax rates dropping as a VAT is implemented. Pretax money will be the winner here as it has not yet been taxed.

[alex753]

It seems more and more likely that they will reduce pre-tax 401(k) limits, but not as drastically as down to $2,400. 

Don't forget that if you have an HSA, those contributions are also pre-tax as of now, up to, I believe, what you contribute less employer seed money if you get any.  I've had an HSA for the last 2-3 years and max it out.  My tax free contributions are $2800, and my employer gives me a yearly seed of $600, for a total of $3400 added to my HSA account yearly.