401k savings limit to increase in 2023

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

Really? I'd rather have twice as much money even if I couldn't put away as high a proportion in taxed advantaged accounts....wouldn't you?

Yes, but nothing prevents someone from making twice as much money. It is a personal choice. Get a second job. Become a physician instead of a teacher. Become an engineer instead of an bus driver. If you don’t have the skills, get them. Reading books is free. Financial Aid is available for those in need. You get the idea.

On the other hand, when it comes to tax-advantaged savings, there are very limited personal choices. There are literally laws that prevent high income individuals from saving the same percentage of their income pre-tax as their lower income counterparts. This is on top of a progressive tax bracketing structure and on top of many tax deductions that phase out with income and on top of many tax credits that phase out with income.

A person with an HHI of $500K paying taxes on 80% of their income is still paying taxes on $400K as compared to someone with an HHI of $160K who ends up paying taxes on only $128K. The high income individual is still paying a lot more in taxes, despite the more equitable savings structure. Do we really need to keep piling on countless nonlinear penalties for earned income?!? No one is calling for anything as radical as a flat income tax here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You're "permitted" to save as much of your income as you want. You just don't get to deduct more than the allowance from your taxable income. If you want to save more of your $580,000 (at least, based on your 10 percent stat) household income, I'm sure you can figure out how to open a taxable investment account.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You are really disgusting

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

Really? I'd rather have twice as much money even if I couldn't put away as high a proportion in taxed advantaged accounts....wouldn't you?

Yes, but nothing prevents someone from making twice as much money. It is a personal choice. Get a second job. Become a physician instead of a teacher. Become an engineer instead of an bus driver. If you don’t have the skills, get them. Reading books is free. Financial Aid is available for those in need. You get the idea.

On the other hand, when it comes to tax-advantaged savings, there are very limited personal choices. There are literally laws that prevent high income individuals from saving the same percentage of their income pre-tax as their lower income counterparts. This is on top of a progressive tax bracketing structure and on top of many tax deductions that phase out with income and on top of many tax credits that phase out with income.

A person with an HHI of $500K paying taxes on 80% of their income is still paying taxes on $400K as compared to someone with an HHI of $160K who ends up paying taxes on only $128K. The high income individual is still paying a lot more in taxes, despite the more equitable savings structure. Do we really need to keep piling on countless nonlinear penalties for earned income?!? No one is calling for anything as radical as a flat income tax here.

I'll agree to tax advantaged accounts based on percentage of income if you'll agree to get rid of the Social Security cap and tax all earnings based on percentage of income. Cool?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

Really? I'd rather have twice as much money even if I couldn't put away as high a proportion in taxed advantaged accounts....wouldn't you?

Yes, but nothing prevents someone from making twice as much money. It is a personal choice. Get a second job. Become a physician instead of a teacher. Become an engineer instead of an bus driver. If you don’t have the skills, get them. Reading books is free. Financial Aid is available for those in need. You get the idea.

On the other hand, when it comes to tax-advantaged savings, there are very limited personal choices. There are literally laws that prevent high income individuals from saving the same percentage of their income pre-tax as their lower income counterparts. This is on top of a progressive tax bracketing structure and on top of many tax deductions that phase out with income and on top of many tax credits that phase out with income.

A person with an HHI of $500K paying taxes on 80% of their income is still paying taxes on $400K as compared to someone with an HHI of $160K who ends up paying taxes on only $128K. The high income individual is still paying a lot more in taxes, despite the more equitable savings structure. Do we really need to keep piling on countless nonlinear penalties for earned income?!? No one is calling for anything as radical as a flat income tax here.

I'll agree to tax advantaged accounts based on percentage of income if you'll agree to get rid of the Social Security cap and tax all earnings based on percentage of income. Cool?

I would love to do that. Then Social Security benefits for high income earners wouldn’t be capped at a ridiculously low $3,345 per month for those that retire at the normal age. The only reason this upper limit isn’t more of an outrage is because of the limit on taxable income during working years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You are really disgusting

You seem to be confused regarding the way taxes work. Perhaps an explanation with more numbers?

Household #1: MFJ couple with taxable income of $647,851 has a federal tax liability of $174,253 and an effective tax rate of 26.9%.

Household #2: MFJ family of five with taxable income of $178,151 has a federal tax liability of $30,427 and an effective tax rate of only 17.1%.

These are the actual tax liabilities for 2022. Clearly, Household #2 is the more disgusting of the two, refusing to pay their fair share.

Even worse, we have two people in Household #1 that are paying $87,126.50 EACH into the federal government, yet five people in Household #2 paying only $6,085.40 EACH into the same federal government. Few things are more patently egregious than a person that stands by and watches another person be forced to pay 14X as much to receive the same benefits and services.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You are really disgusting

You seem to be confused regarding the way taxes work. Perhaps an explanation with more numbers?



Household #1: MFJ couple with taxable income of $647,851 has a federal tax liability of $174,253 and an effective tax rate of 26.9%.

Household #2: MFJ family of five with taxable income of $178,151 has a federal tax liability of $30,427 and an effective tax rate of only 17.1%.

These are the actual tax liabilities for 2022. Clearly, Household #2 is the more disgusting of the two, refusing to pay their fair share.

Even worse, we have two people in Household #1 that are paying $87,126.50 EACH into the federal government, yet five people in Household #2 paying only $6,085.40 EACH into the same federal government. Few things are more patently egregious than a person that stands by and watches another person be forced to pay 14X as much to receive the same benefits and services.

Leave the country then Karen?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

With the mega Roth IRA you can put away $66,000 per person per year plus back door Roth of $6500 per person.

Most employers don’t have a mega Roth and even then so the means testing hardly ever supports the maximum.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You are really disgusting

You seem to be confused regarding the way taxes work. Perhaps an explanation with more numbers?

Household #1: MFJ couple with taxable income of $647,851 has a federal tax liability of $174,253 and an effective tax rate of 26.9%.

Household #2: MFJ family of five with taxable income of $178,151 has a federal tax liability of $30,427 and an effective tax rate of only 17.1%.

These are the actual tax liabilities for 2022. Clearly, Household #2 is the more disgusting of the two, refusing to pay their fair share.

Even worse, we have two people in Household #1 that are paying $87,126.50 EACH into the federal government, yet five people in Household #2 paying only $6,085.40 EACH into the same federal government. Few things are more patently egregious than a person that stands by and watches another person be forced to pay 14X as much to receive the same benefits and services.

Progressive taxation is a feature, not a bug.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You're "permitted" to save as much of your income as you want. You just don't get to deduct more than the allowance from your taxable income. If you want to save more of your $580,000 (at least, based on your 10 percent stat) household income, I'm sure you can figure out how to open a taxable investment account.

The point is those making $400K+ are already paying in the top tax bracket, loosing most itemized deductions (as they phase out and thanks to AMT). The tax rate is already ridiculously high and another loss is the inability to save as much percentage wise thru tax free investing. Majority of us are not worth $10M+. And if we are, we are paying high taxes on all earnings (ie stock options are taxed, no way around it).
SO yes, we make alot more, but we also pay significantly more in taxes. Most of us are not able to reduce our taxes---it's just not legal. So given that by Age 45 I have paid more in state taxes than 95% of people will ever pay in Federal and state taxes over their lifetime, I do think I'm entitled to comment on this. I more than pay my "fair share"; yet I don't get most tax deductions available to the majority of Americans.
That doesn't even take into account federal taxes. We pay alot already. It's not us you should be mad at for "not paying taxes". It's the ultra wealthy, and businesses that don't pay the appropriate tax rate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

Really? I'd rather have twice as much money even if I couldn't put away as high a proportion in taxed advantaged accounts....wouldn't you?

Yes, but nothing prevents someone from making twice as much money. It is a personal choice. Get a second job. Become a physician instead of a teacher. Become an engineer instead of an bus driver. If you don’t have the skills, get them. Reading books is free. Financial Aid is available for those in need. You get the idea.

On the other hand, when it comes to tax-advantaged savings, there are very limited personal choices. There are literally laws that prevent high income individuals from saving the same percentage of their income pre-tax as their lower income counterparts. This is on top of a progressive tax bracketing structure and on top of many tax deductions that phase out with income and on top of many tax credits that phase out with income.

A person with an HHI of $500K paying taxes on 80% of their income is still paying taxes on $400K as compared to someone with an HHI of $160K who ends up paying taxes on only $128K. The high income individual is still paying a lot more in taxes, despite the more equitable savings structure. Do we really need to keep piling on countless nonlinear penalties for earned income?!? No one is calling for anything as radical as a flat income tax here.

I'll agree to tax advantaged accounts based on percentage of income if you'll agree to get rid of the Social Security cap and tax all earnings based on percentage of income. Cool?

If you pay me accordingly when I retire, then yes. Do you realize that the cap on SS also means there is a max on payouts? So someone making $147K is taxed the same as Bill gates for Social Security. But that means Bill gates can also only collect the same amount at retirement. Raise the tax level, then SS would need to pay out accordingly and that's not how it's set up

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You are really disgusting

You seem to be confused regarding the way taxes work. Perhaps an explanation with more numbers?

Household #1: MFJ couple with taxable income of $647,851 has a federal tax liability of $174,253 and an effective tax rate of 26.9%.

Household #2: MFJ family of five with taxable income of $178,151 has a federal tax liability of $30,427 and an effective tax rate of only 17.1%.

These are the actual tax liabilities for 2022. Clearly, Household #2 is the more disgusting of the two, refusing to pay their fair share.

Even worse, we have two people in Household #1 that are paying $87,126.50 EACH into the federal government, yet five people in Household #2 paying only $6,085.40 EACH into the same federal government. Few things are more patently egregious than a person that stands by and watches another person be forced to pay 14X as much to receive the same benefits and services.

Progressive taxation is a feature, not a bug.

Yes, which proves the original point that families with low- to mid-level incomes are exceptionally lucky to be gifted such a generous tax structure.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

With the mega Roth IRA you can put away $66,000 per person per year plus back door Roth of $6500 per person.

You can't just decide to do a mega Roth, you have to be in an industry and job where they even offer you the ability to do it.

[Anonymous]

This is good for someone like me, who lacks the discipline to save outside of the 401K. Having it taken out of my check before I see it is what I need.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Most people cannot afford to do this

The people who cannot afford to do this don’t really need to save this much. Median HHI is around $78K and everyone knows that 20% of income needs to be set aside for retirement savings. That’s only $15,600 needed per year, so no need to save more by traditional standards.

The real concern is for those families that make more than $145K per year. The $29K allowance between 401k and IRA contributions isn’t really enough for these people. Congress should change the rules so that pre-tax contribution limits vary as a percentage of HHI so that everyone is permitted to save 20% of their income for retirement. This is especially true for high HHI families since social security replaces a lesser percentage of income as income increases. DH and I both work, but the $58K allowance between our collective retirement plans isn’t even 10% of our HHI. And we don’t even get a tax break on the IRA contributions anyway. So illogical and unfair. LMC and MC families don’t know how lucky they are!

You're "permitted" to save as much of your income as you want. You just don't get to deduct more than the allowance from your taxable income. If you want to save more of your $580,000 (at least, based on your 10 percent stat) household income, I'm sure you can figure out how to open a taxable investment account.

The point is those making $400K+ are already paying in the top tax bracket, loosing most itemized deductions (as they phase out and thanks to AMT). The tax rate is already ridiculously high and another loss is the inability to save as much percentage wise thru tax free investing. Majority of us are not worth $10M+. And if we are, we are paying high taxes on all earnings (ie stock options are taxed, no way around it).
SO yes, we make alot more, but we also pay significantly more in taxes. Most of us are not able to reduce our taxes---it's just not legal. So given that by Age 45 I have paid more in state taxes than 95% of people will ever pay in Federal and state taxes over their lifetime, I do think I'm entitled to comment on this. I more than pay my "fair share"; yet I don't get most tax deductions available to the majority of Americans.
That doesn't even take into account federal taxes. We pay alot already. It's not us you should be mad at for "not paying taxes". It's the ultra wealthy, and businesses that don't pay the appropriate tax rate.

I'm not mad at you for "not paying taxes," I'm mad at you for being obtuse about this.

1) You are paying exactly your "fair share," at least according to our tax laws, not more than it, unless you're deliberately overpaying.
2) No one said you weren't entitled to comment.
3) You seem to think lower-income people are "lucky" not to pay a higher percentage of their income in taxes, but unless someone is paying you this much money for a job that requires absolutely no critical thinking abilities, I'm sure you can find your way to the realization that virtually everyone making the median HHI would much rather have your problems and your after-tax income than have a lower tax bracket and make $78,000 a year pre-tax.
4) My family makes more than twice the $145,000 a year figure you listed above as the cutoff between the "lucky" low earners and those of us in the upper middle class who are suffering so badly, so yes, I understand that it's frustrating to pay high taxes on a high income. Fortunately, you have plenty of money to use to salve your emotional wounds.
5) I do agree with you that the ultrawealthy and corporations should pay far more in taxes! Congratulations on finding some common ground. Now stop spouting the rest of your completely un-self-aware nonsense.