feddoc
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Better pay attention to what you have now. These changes may not turn out well. Another reason why I have invested in dirt over the years.
Got a 401k?
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roadrunner
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Leave it to the poor performers (politicians) to complicate things.
Flat tax. Simple. You earn $1MM, you pay the same percent that someone who earns $35K. At 15%, it would be $150K and $5.3K respectively...
Flat tax. Simple. You earn $1MM, you pay the same percent that someone who earns $35K. At 15%, it would be $150K and $5.3K respectively...
willfrye027
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I don’t like the idea of this. More socialism.
But I did the math. I would get the same effective savings right now. And even if I made a lot more than I do, it would be a difference of 4-6% at most. Which adds up for sure but is not catastrophic.
what would be the real killer is if you cannot get the tax credit until you file yearly...in which case you’ve essentially been lending your money to the government for the whole year interest free and losing out on a year of compound interest.
a lot of rambling to say this would chip away at the narrow margins making 401k a great, stable investment currently..
But I did the math. I would get the same effective savings right now. And even if I made a lot more than I do, it would be a difference of 4-6% at most. Which adds up for sure but is not catastrophic.
what would be the real killer is if you cannot get the tax credit until you file yearly...in which case you’ve essentially been lending your money to the government for the whole year interest free and losing out on a year of compound interest.
a lot of rambling to say this would chip away at the narrow margins making 401k a great, stable investment currently..
OutdoorWriter
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Same here. 401 is now an IRA & doing well in the market as an Invesco account. At the end of each year, we just pull out the minimum required so it continues to gain.
desperatehills
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This will not affect me now. For years we put in to my wifes 401K a flat percentage every paycheck. For the last 4 years all the money has been going into Roth 401K so the money is already taxed and I can remove it without paying taxes later. When we retire we can pull some from each to avoid moving to a higher tax bracket
roadrunner
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Give 'em time, they'll "figure out" a way to tax Roth money too...
Buckhunter1955
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I moved 70% of mine into the general fund, it only earns + or - 3% but it's safe. I'm to close to retirement I can't afford to take a big hit when the market makes a correction.
grizzly
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I'm for a flat tax for every dollar above a certain amount.
Basically nobody would pay any tax on the first $30,000(?) but would pay the same 19%(?) above that. No more deductions, contributions, tax shelters, loopholes, credits, etc...
Classify it as income or capital gains... it doesn't matter.
Donate to charity or pay mortgage interest... it doesn't matter.
If you make the money, you pay the tax.
Done. Problem solved.
Basically nobody would pay any tax on the first $30,000(?) but would pay the same 19%(?) above that. No more deductions, contributions, tax shelters, loopholes, credits, etc...
Classify it as income or capital gains... it doesn't matter.
Donate to charity or pay mortgage interest... it doesn't matter.
If you make the money, you pay the tax.
Done. Problem solved.
LivingTheDream
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If they did this it would cause 100s of lobbyist to be unemployed.
2lumpy
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I have some 401K income and I guess it depends how much of ones income comes for 401k or Roth funds but to be honest with you I’m a whole lot more concerned with the elephant in the room that I don’t think anybody can control. For three decades I’ve wonder when the Piper was going show up. It sure looks like raging inflation is starting to get oxygen.
For fixed income folks, rapid inflation trumps tax rates every time, based on my limited understanding of National economics. That’s the monster I’m trying to figure out how to survive.
For fixed income folks, rapid inflation trumps tax rates every time, based on my limited understanding of National economics. That’s the monster I’m trying to figure out how to survive.
roadrunner
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Anyone on salary and exempt from overtime is on a fixed income...
grizzly
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There are two sides to this discussion:
1) Putting money into people's pockets
----- 1a) Stimulus checks and Upfront Tax Credits
----- 1b) Tax Cuts
2) Controlling the National Debt
When one party wants to give free cash it fixes Item #1 and politicians get reelected. (And don't think this only refers to Dems, Trump and both Republican Georgian Senatorial candidates called for increasing stimulus payments to $2,000 right before the Special Election.) When the other other party runs on Tax Cuts, it does the EXACT SAME THING... it fixes Item #1, but does nothing for Item #2. These ideas are "twin brothers of a different mother" from a debt/deficit economic standpoint. They're a difference without a distinction.
Anybody who says they are a "fiscal conservative" while promoting any part of Item #1 without an equal, or greater, cut to National Spending is part of the problem. This is not a partisan problem, it applies to both parties.
Here are worst Actual Budget Deficits By President:
1) President Obama - $6.781 Trillion over Eight Years. (2008 Recession & ACA)
2) President Trump - $6.6 Trillion over Four Years. (COVID)
3) President Bush - $3.293 Trillion over Eight Years. (9/11 & 2001 Recession)
4) President Reagan - $1.412 Trillion over Eight Years. (Doubled National Debt with tax cuts and Medicare Expansion)
The last President to run an annual Federal Budget Surplus was President Clinton for the final four years of his Presidency. These are the only Budget Surplus years since 1970.
We have a major problem, but it's not solved simply with a D or an R.
1) Putting money into people's pockets
----- 1a) Stimulus checks and Upfront Tax Credits
----- 1b) Tax Cuts
2) Controlling the National Debt
When one party wants to give free cash it fixes Item #1 and politicians get reelected. (And don't think this only refers to Dems, Trump and both Republican Georgian Senatorial candidates called for increasing stimulus payments to $2,000 right before the Special Election.) When the other other party runs on Tax Cuts, it does the EXACT SAME THING... it fixes Item #1, but does nothing for Item #2. These ideas are "twin brothers of a different mother" from a debt/deficit economic standpoint. They're a difference without a distinction.
Anybody who says they are a "fiscal conservative" while promoting any part of Item #1 without an equal, or greater, cut to National Spending is part of the problem. This is not a partisan problem, it applies to both parties.
Here are worst Actual Budget Deficits By President:
1) President Obama - $6.781 Trillion over Eight Years. (2008 Recession & ACA)
2) President Trump - $6.6 Trillion over Four Years. (COVID)
3) President Bush - $3.293 Trillion over Eight Years. (9/11 & 2001 Recession)
4) President Reagan - $1.412 Trillion over Eight Years. (Doubled National Debt with tax cuts and Medicare Expansion)
The last President to run an annual Federal Budget Surplus was President Clinton for the final four years of his Presidency. These are the only Budget Surplus years since 1970.
We have a major problem, but it's not solved simply with a D or an R.
Homer
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kinda like social security...............?
roadrunner
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People don't realize that a 401K falls in line with the tenets of socialism. You cannot enjoy the benefit of those earnings until you have done your duty to society by providing services or products all the while giving money earned in the form of taxes to the roaches of mankind - gov't.
I could retire from the daily grind today and be a fishing guide 4 months out of the year if I weren't so "young"...
Bluehair
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Any “right” granted you by government then meets your definition of socialism.
But there is a huge difference between voluntary investments in the private sector and money taken from you and supposedly held in account for you on some bureaucrat’s lotus spreadsheet.
Retiring has a lot more to do with money than age in my experience. I suppose someday I’ll be old enough to retire.
But there is a huge difference between voluntary investments in the private sector and money taken from you and supposedly held in account for you on some bureaucrat’s lotus spreadsheet.
Retiring has a lot more to do with money than age in my experience. I suppose someday I’ll be old enough to retire.
roadrunner
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Whoever said government had the authority to grant "rights"? The fallacies and hubris of man tend to think that way. The very lifestyle you full well enjoy is not based on that principle but that man has the obligation to protect any and all rights already granted by whatever source you choose they come from.
The act of voluntary contribution against forced is one thing, however, the socialist part is not allowing you to exercise either of those benefits until you meet their definition of time served in society by being a productive citizen.
Retirement is a state of mind and has nothing to do with age or financial independency. It's just the quality of life you want to have depends on the cash flow you will need...
#mymoneymychoice
The act of voluntary contribution against forced is one thing, however, the socialist part is not allowing you to exercise either of those benefits until you meet their definition of time served in society by being a productive citizen.
Retirement is a state of mind and has nothing to do with age or financial independency. It's just the quality of life you want to have depends on the cash flow you will need...
#mymoneymychoice
Bluehair
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You said the 401(k) was socialism, not me. And you also tried to make some point about retirement and age. And you can withdraw your money from your 401(k). And I totally disagree that retirement doesn’t have anything to do financial independence.
Other than those things, your post is spot on.
Have you ever been accused of overthinking things?
Other than those things, your post is spot on.
Have you ever been accused of overthinking things?
grizzly
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A 401k isn't socialism, it's a tax vehicle offered as a benefit to those who use it. There are hundreds of other tax vehicles available as well, that's just one of them.
Nobody is required to use a 401k by the government. You can take your paycheck and invest it outside of a 401k, blow it all on a hat collection, or bury it in the backyard if you so choose. We all have the freedom to succeed or fail on how we spend our money. All a 401k does is say that you can defer certain taxes (and potentially gain employer-sponsored benefits) if you choose to participate in one.
It is a government program that was put in place to promote saving by the public to help them not be totally reliant on government services and Social Security in their latter years. I would argue it's the opposite of socialism because it promotes financial independence but relies on the employee to participate and the level of participation at which (s)he chooses. The money also stays in the employees possession as opposed to somebody else's. The age requirements and penalties if withdrawn prior to that age, not subject to certain exemptions, points to the fact the purpose is to promote financial well-being after employment. The average person is not that bright (and half are dumber) so the are programs to help incentivize wise behavior.
There's an argument to be made that SSA is socialism, but I don't see it for 401k accounts.
Nobody is required to use a 401k by the government. You can take your paycheck and invest it outside of a 401k, blow it all on a hat collection, or bury it in the backyard if you so choose. We all have the freedom to succeed or fail on how we spend our money. All a 401k does is say that you can defer certain taxes (and potentially gain employer-sponsored benefits) if you choose to participate in one.
It is a government program that was put in place to promote saving by the public to help them not be totally reliant on government services and Social Security in their latter years. I would argue it's the opposite of socialism because it promotes financial independence but relies on the employee to participate and the level of participation at which (s)he chooses. The money also stays in the employees possession as opposed to somebody else's. The age requirements and penalties if withdrawn prior to that age, not subject to certain exemptions, points to the fact the purpose is to promote financial well-being after employment. The average person is not that bright (and half are dumber) so the are programs to help incentivize wise behavior.
There's an argument to be made that SSA is socialism, but I don't see it for 401k accounts.
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roadrunner
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I said a 401K falls in line with the aspects (tenets) of socialism in that the gov't can tell you when you are "allowed" to use those funds. Never once said IT WAS a social program. Early withdrawal comes with a penalty, or punishment, from the government...You said the 401(k) was socialism, not me. And you also tried to make some point about retirement and age. And you can withdraw your money from your 401(k). And I totally disagree that retirement doesn’t have anything to do financial independence.
Other than those things, your post is spot on.
Have you ever been accused of overthinking things?
You can disagree all you want about retirement and financial independence (and age) as it appears you've been conditioned to think that way. I said retirement is a state of mind. Can be retired and still be earning an income. Retirement just means you don't have to do what you used to have to do.
A guy can be retired from the corporate lifestyle working part-time at a hobby that generates enough income to satisfy his needs. The typical retired guy is not financially independent as they still rely on their investments to earn an income. Not sure I have meet anyone to fully drain a 401K or IRA into cash to use over the course of a couple of decades. Why? Because there isn't enough and rely on that future growth to satisfy non-working needs and/or they would pay an extreme amount in taxes expediting the depletion of those funds.
Someone who is a smart investor that began at the age of 25 can very well be retired at the age of 35 and no different than someone who played the game and waited to be retired at the age of 65 because that's what he was told he had to do by everyone in commerce and the government.
No overthinking here, sorry that you've been duped into thinking that...?
desperatehills
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I do not have the tools required to over think anything but my happiness in retirement is going to be directly tied to my bankroll. Tags and ammo are not cheap
OutdoorWriter
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IMO, if someone is still doing something physical to make money, whether it's serving as a welcoming dude at Walmart or selling woodcrafts from his home workshop, he's not retired, even though he had officially retired from a job he held for 20 years.I said a 401K falls in line with the aspects (tenets) of socialism in that the gov't can tell you when you are "allowed" to use those funds. Never once said IT WAS a social program. Early withdrawal comes with a penalty, or punishment, from the government...
You can disagree all you want about retirement and financial independence (and age) as it appears you've been conditioned to think that way. I said retirement is a state of mind. Can be retired and still be earning an income. Retirement just means you don't have to do what you used to have to do.
A guy can be retired from the corporate lifestyle working part-time at a hobby that generates enough income to satisfy his needs. The typical retired guy is not financially independent as they still rely on their investments to earn an income. Not sure I have meet anyone to fully drain a 401K or IRA into cash to use over the course of a couple of decades. Why? Because there isn't enough and rely on that future growth to satisfy non-working needs and/or they would pay an extreme amount in taxes expediting the depletion of those funds.
Someone who is a smart investor that began at the age of 25 can very well be retired at the age of 35 and no different than someone who played the game and waited to be retired at the age of 65 because that's what he was told he had to do by everyone in commerce and the government.
No overthinking here, sorry that you've been duped into thinking that...?
All the military & law enforcement folks who put in their time early in life and then retired but still work & make money at something else are prime examples.
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elkassassin
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Who Voted This Current JOKER In?
Bluehair
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That’s a rather long and uninformative post. You take the fun out of profundity.I said a 401K falls in line with the aspects (tenets) of socialism in that the gov't can tell you when you are "allowed" to use those funds. Never once said IT WAS a social program. Early withdrawal comes with a penalty, or punishment, from the government...
You can disagree all you want about retirement and financial independence (and age) as it appears you've been conditioned to think that way. I said retirement is a state of mind. Can be retired and still be earning an income. Retirement just means you don't have to do what you used to have to do.
A guy can be retired from the corporate lifestyle working part-time at a hobby that generates enough income to satisfy his needs. The typical retired guy is not financially independent as they still rely on their investments to earn an income. Not sure I have meet anyone to fully drain a 401K or IRA into cash to use over the course of a couple of decades. Why? Because there isn't enough and rely on that future growth to satisfy non-working needs and/or they would pay an extreme amount in taxes expediting the depletion of those funds.
Someone who is a smart investor that began at the age of 25 can very well be retired at the age of 35 and no different than someone who played the game and waited to be retired at the age of 65 because that's what he was told he had to do by everyone in commerce and the government.
No overthinking here, sorry that you've been duped into thinking that...?
Re: my conditioning. I just checked my condition and I’m pretty sure I’m ok. Hopefully everyone else is also.
The government does not tell you what you can do with these funds they just say since you got to deduct the money you put in you're going to pay when you draw it out. welcome to the real world.
If you've invested the funds even half decent in the last 10 years you've kicked absolute azz and the taxes don't mean jack.
The more money you make the less taxes you pay. getting the white trash to shoot their feet off to benefit the top 1% is truly the definition of absolute political success. the Brit's have their royal family and we have our tax system.
If you've invested the funds even half decent in the last 10 years you've kicked absolute azz and the taxes don't mean jack.
The more money you make the less taxes you pay. getting the white trash to shoot their feet off to benefit the top 1% is truly the definition of absolute political success. the Brit's have their royal family and we have our tax system.
