Should 401ks be phased out?

[Anonymous]

They should double the limits as a start - saving $20k a year when that's a month's spending is silly.

[Anonymous]

Anonymous wrote:Social security steals 12% of your first 168k and it's not a good program for younger people , it's setup for old people. I would opt out and have a better use of that 12% now like a house, stocks etc.

I remember making this argument in the mid-80's. In that time, the market crashed twice.

[Anonymous]

I started my 401 32 years ago. Thankfully, DH and I have maxed the savings and we will be able to retire comfortably.
We actually had DC put $ away during their teenage jobs in retirement funds. Best savings plan we have available to us.

[Anonymous]

You got to hand it to Boomers - cheap college, last generation with meaningful participation in defined benefit pensions, benefitted from tax advantages of newly created IRAs and 401Ks at the beginning of their professional careers, got the "peace dividend" of end of Cold War which led to multiple bull runs, multiple tech booms, long periods of accommodative monetary policies to fuel asset accumulation, and 40 years of supple side tax cuts.

And now - as they enter retirement en mass - they are benefitting from the highest risk free rates in 30+ years.

If you're a white Boomer without a disability/mental illness and don't have a net worth of at least $2.5M I really do question what the hell you were doing with your time over the past 50 years.

[Anonymous]

Anonymous wrote:You got to hand it to Boomers - cheap college, last generation with meaningful participation in defined benefit pensions, benefitted from tax advantages of newly created IRAs and 401Ks at the beginning of their professional careers, got the "peace dividend" of end of Cold War which led to multiple bull runs, multiple tech booms, long periods of accommodative monetary policies to fuel asset accumulation, and 40 years of supple side tax cuts.

And now - as they enter retirement en mass - they are benefitting from the highest risk free rates in 30+ years.

If you're a white Boomer without a disability/mental illness and don't have a net worth of at least $2.5M I really do question what the hell you were doing with your time over the past 50 years.

lol i agree but look forward to people's comments on this

It was so easy to become wealthy as a white boomer.

[Anonymous]

Anonymous wrote:They should double the limits as a start - saving $20k a year when that's a month's spending is silly.

Lol, no, the government should not be providing additional tax breaks for people that spend $20,000 a month.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You got to hand it to Boomers - cheap college, last generation with meaningful participation in defined benefit pensions, benefitted from tax advantages of newly created IRAs and 401Ks at the beginning of their professional careers, got the "peace dividend" of end of Cold War which led to multiple bull runs, multiple tech booms, long periods of accommodative monetary policies to fuel asset accumulation, and 40 years of supple side tax cuts.

And now - as they enter retirement en mass - they are benefitting from the highest risk free rates in 30+ years.

If you're a white Boomer without a disability/mental illness and don't have a net worth of at least $2.5M I really do question what the hell you were doing with your time over the past 50 years.

lol i agree but look forward to people's comments on this

It was so easy to become wealthy as a white boomer.

A Boomer who has been maxing out their 401K since 1982 and just invested 100% in the SP500 would have a balance of $3.2M in 2019.

https://dqydj.com/always-maxed-out-your-401k/

And that doesn't include the crazy COVID boom in markets. Which - if they just let $3.2M ride in 2019 and halt any additional 401K contributions - would be worth $6.3M today.

https://dqydj.com/sp-500-periodic-reinvestment-calculator-dividends/

[Anonymous]

Anonymous wrote:Seems a growing movement. So many people don’t have one and the people who do a huge tax giveaway to rich.

Look at all the New Yorkers retired to Florida who avoided SALT taxes for 40 years on 401k contributions now in Florida.

If we could tax those trillions would solve a lot of problems

Why? It's going to be taxed anyways.. Better to get rid of all the loopholes like irrevocable trusts, South Dakota trusts, generation skipping trusts, etc and implement a wealth tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Seems a growing movement. So many people don’t have one and the people who do a huge tax giveaway to rich.

Look at all the New Yorkers retired to Florida who avoided SALT taxes for 40 years on 401k contributions now in Florida.

If we could tax those trillions would solve a lot of problems

Why? It's going to be taxed anyways.. Better to get rid of all the loopholes like irrevocable trusts, South Dakota trusts, generation skipping trusts, etc and implement a wealth tax.

or maybe start taxing 50% of the population who pays ZERO.

Even a few hundred dollars. Everyone should have skin in the game

[Anonymous]

Anonymous wrote:

Anonymous wrote:Seems a growing movement. So many people don’t have one and the people who do a huge tax giveaway to rich.

Look at all the New Yorkers retired to Florida who avoided SALT taxes for 40 years on 401k contributions now in Florida.

If we could tax those trillions would solve a lot of problems

Why? It's going to be taxed anyways.. Better to get rid of all the loopholes like irrevocable trusts, South Dakota trusts, generation skipping trusts, etc and implement a wealth tax.

The PP, whom I think is the OP, has complained throughout this thread that 401ks deprive high tax states like NY of state taxes they are due from RMDs because so many NY residents who hit retirement age move to Florida, which does not tax RMDs.

It would seem to me that if state deprivation of taxes on RMDs is OP's concern, she should be arguing for eliminating the traditional 401k and leaving just the 401k Roth as states collect taxes on those when contributions are made.

[Anonymous]

Anonymous wrote:Seems a growing movement. So many people don’t have one and the people who do a huge tax giveaway to rich.

Look at all the New Yorkers retired to Florida who avoided SALT taxes for 40 years on 401k contributions now in Florida.

If we could tax those trillions would solve a lot of problems

401K distributions tend to be lumpy. Assume you live in 4 states before you retired and in your first year of retire you take a $50K distribution funded by stock sales in your 401K.

All 4 states + Feds get a piece of that $50K distribution? How does that even work? How do you even pay the taxes to previous states? How would the previous states even know if you owed them taxes? 401K administrators only issue 1099-Rs to your current home state on record. Further, with 401K rollovers the current administrator will not know where you lived when you made the previous contributions.

This seems so dumb. Just a jobs program for accountants and lawyers. Congrats - you've made the tax code 10x more complicated.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems a growing movement. So many people don’t have one and the people who do a huge tax giveaway to rich.

Look at all the New Yorkers retired to Florida who avoided SALT taxes for 40 years on 401k contributions now in Florida.

If we could tax those trillions would solve a lot of problems

Why? It's going to be taxed anyways.. Better to get rid of all the loopholes like irrevocable trusts, South Dakota trusts, generation skipping trusts, etc and implement a wealth tax.

or maybe start taxing 50% of the population who pays ZERO.

Even a few hundred dollars. Everyone should have skin in the game

That too! Why not?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems a growing movement. So many people don’t have one and the people who do a huge tax giveaway to rich.

Look at all the New Yorkers retired to Florida who avoided SALT taxes for 40 years on 401k contributions now in Florida.

If we could tax those trillions would solve a lot of problems

Why? It's going to be taxed anyways.. Better to get rid of all the loopholes like irrevocable trusts, South Dakota trusts, generation skipping trusts, etc and implement a wealth tax.

The PP, whom I think is the OP, has complained throughout this thread that 401ks deprive high tax states like NY of state taxes they are due from RMDs because so many NY residents who hit retirement age move to Florida, which does not tax RMDs.

It would seem to me that if state deprivation of taxes on RMDs is OP's concern, she should be arguing for eliminating the traditional 401k and leaving just the 401k Roth as states collect taxes on those when contributions are made.

Maybe retirees will stay in NY if
- they cut taxes on retirement income
- zero sales tax for senior citizens on essentials
- punish criminals; maybe hang the violent ones
- change the weather so it's warm year around

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Seems a growing movement. So many people don’t have one and the people who do a huge tax giveaway to rich.

Look at all the New Yorkers retired to Florida who avoided SALT taxes for 40 years on 401k contributions now in Florida.

If we could tax those trillions would solve a lot of problems

Why? It's going to be taxed anyways.. Better to get rid of all the loopholes like irrevocable trusts, South Dakota trusts, generation skipping trusts, etc and implement a wealth tax.

The PP, whom I think is the OP, has complained throughout this thread that 401ks deprive high tax states like NY of state taxes they are due from RMDs because so many NY residents who hit retirement age move to Florida, which does not tax RMDs.

It would seem to me that if state deprivation of taxes on RMDs is OP's concern, she should be arguing for eliminating the traditional 401k and leaving just the 401k Roth as states collect taxes on those when contributions are made.

Maybe retirees will stay in NY if
- they cut taxes on retirement income
- zero sales tax for senior citizens on essentials
- punish criminals; maybe hang the violent ones
- change the weather so it's warm year around

Especially the last one!

[Anonymous]

Anonymous wrote:

Anonymous wrote:Sure, let’s remove the only remaining method of saving money for an ever longer retirement. Great idea. I guess we should all do ritualistic suicide once we hit 70. As far as people moving states, that’s New York’s issue for electing corrupt politicians in Albany who only know tax and spend giveaway politics.

That would make society better the boomers are destroying everyone and everything and sucking up all the money in their old age

Ummmm -- that is wrong. Boomers will hand massive amounts of money to their kids and grand kids. Not destroying anything. Biggest wealth transfer in history.