and THAT is one of the reasons Madison proposed in 1789 adding the Bill of Rights to the Constitution (just ratified the year before). that "right to bear arms" language might come in handy someday...

 

I'm not buying it. Links, please. The only thing google turns up are dubious websites.

 

I was half joking, but legally they can exercise a lot of control over it. Bill Clinton proposed a one time 15% tax on 401k and IRAs to pay down the deficit, and the 401k is really just a tax code like the Roth IRA, subject to change, of course with the threat of severe political repercussions ��

 

It doesn't matter what you do with it... retirment or new Harley. It's 25% (plus FICA etc).

 

Sure, legally, they could pass a law saying that every male has to wear a dress one day a week so that they're more sensitive to women. Screwing with current 401k/IRA laws is only slightly less nutty.

These ideas get tossed out every few years by Democrats who pander to those who have never saved a dime for retirement. The idea always gets buried quickly because those same Democrats quickly discover that the people writing checks to their campaigns tend to not like their retirement savings screwed with. And of course the GOP opposes any changes to 401ks/IRAs.

Just look at Obama's much more modest 2015 proposal to limit tax benefits on 401ks/IRAs of $3.4 million. That proposal went nowhere.

Realistically, in order for any kind of 401k/IRA cap/penalty tax to have a chance in hades of passing, the Democrats will have to overwhelmingly control both legislative branches and the executive branch. Odds of Democrats taking the House before 2022 are flat out zero due to gerrymandering and then they're powerball odds until 2032 unless things change drastically in state legislative chambers in the next four years.

 

all good points and i think you are right... but... serious academics and professionals do discuss this idea at professional events. I've heard it discussed at the Heckerling Institute annual trusts and estates conference, for example.

 

Yes, I've also read that concern (tax law changes negatively impacting 401ks/IRAs) more than a few times in the past decade. And it always seems to follow that an alternative to 401ks/IRAs are peddled as a 'better' retirement investment choice. Roths are especially targeted as being susceptible to a change in the tax code.

I see two issues with the attacks on 401ks/IRAs.
1) If (a very big IF) the tax code changed for 401ks/IRAs, current savings in those vehicles would almost certainly be grandfathered.
2) The GOP is very unlikely to support negative changes to 401ks/IRAs because their efforts are more aimed at Social Security. If Social Security programs are reduced through any of the popular proposed methods - chained CPI, raising retirement age, means testing - 401ks/IRAs become even more important for retirement planning and in my opinion less likely to be changed.

My biggest concern about retirement is the likelihood that Social Security benefits will change. I have much less problem with chained CPI and changes in retirement age than I do with means testing. The problem that I have with means testing SS is that it discourages saving for retirement - I consider that to be an unforgivable sin for governments. With pensions rapidly becoming a thing of the past for American workers, I think that government should increase incentives for Americans to save in both 401ks and IRAs.

As far as political reality, the GOP will control the House due to Congressional districting until the 2022 election. If current control of state legislatures remains, there will be even more Congressional districts gerrymandered in favor of the GOP after the next census. Going into the redistricting following the 2010 census, the GOP controlled 57 state legislative chambers; after the 2016 election, the GOP controls 66 state chambers. The same goes for gubernatorial elections - after the 2010 election, the GOP had 29 governorships; after the 2016 election, the GOP has 31 governorships.

 

No sh$t..... Do the Delta new hires know about that? 😏

 

Bonuses are withheld at 25% however taxed as ordinary income. If your effective tax rate is less then 25% you get the difference back when you file.

 

I want to avoid this so I'm trying to understand it. I understand the tax part of it. Certain deductions still come out, and when they do they are no longer pre tax sheltered, and therefore taxed as income. But I don’t understand how any of it can go in post tax PRAP unless that’s election box is marked. If someone elects 100% to go in pretax, and that would exceed the IRS max allowed, shouldn’t the rest just kick out directly to you via direct deposit or check?