Reply to Proposal to cap 401k and other tax accounts once you reach a certain amount, what do you think?

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Reply to "Proposal to cap 401k and other tax accounts once you reach a certain amount, what do you think?"

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[quote=Anonymous]Can someone explain this? Does this mean that once you reach a certain amount of savings you are not allowed to save anymore? Or do you just lose the ability to save pre-tax?

Limit savers' combined balance across tax-preferred accounts: Last year, the president introduced the idea of prohibiting contributions to tax-advantaged retirement accounts when a person's combined balance exceeds a certain level. Such accounts include IRAs, 401(k)s and pensions.
The cap on the combined balance would be based on a saver's age and would vary over time based on factors such as inflation and interest rates.
Last year, for instance, the limit would have been $3.4 million for someone who was 62, but just $1 million for someone who was 40, according to a Tax Policy Center report.
The cap would be based on what it takes to buy a "maximum benefit" annuity at age 62, with a 100% survivor benefit for one's spouse. In 2013, a maximum benefit annuity would have provided $205,000 a year.

http://money.cnn.com/2014/02/04/pf/taxes/retirement-tax-breaks-obama/index.html?iid=s_mpm[/quote]

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