During the Democratic National Convention two weeks ago, news slipped out that Joe Biden was developing a new tax plan that would rollback benefits for 401K plans. He even had his Economic Advisor speak to it at a panel event at the convention.
Like many ‘progressive’ initiatives, this one involves reducing or eliminating 401K tax benefits from higher income households and transferring that benefit to people that earn less.
Other than the general concept , I’ve read a number of articles on the idea and I can’t honestly understand how it would work at all. 401K plans have been around since the 1980s and this seems like a big change. Will this affect current 401K savings, or only future ones? Is there something I might do ahead of time to blunt the potential tax impact, or am I not even impacted by it?
Here’s an Forbes article attempting to explain the complicated changes. If you can figure out what is being proposed, please don’t let me know or I’ll feel dumb for all of the time I’ve spent looking at it … Forbes: Biden’s 401K Tax Plan.
I’ve actually decided it’s probably not worth my time to try to figure out these proposals at this time. After all, I can’t do anything about them and don’t know if they will ever be implemented. Biden has to beat Trump, the Democrats have to hold the House, the Democrats have to win the Senate, and then the Democrats would all have to partner together wit Biden to get this specific proposal passed among all of the dozens of others they have proposed.
I’m guessing that’s unlikely. Even if there a 50/50 chance of EACH of those things coming true, that would mean there is only a 6.25% chance that all FOUR would come true. Why bother spending too much time reading, analyzing, and strategizing what to do in a situation that has maybe a 1 in 15 likelihood?
I have better things to do and I hope you do to. Anyone else putting much effort into understanding 2020 election policy proposals? Any issues that stand out to you?
Image Credit: Pixabay
MrFireStation 
I spend no time on their platforms and proposals. As an Independent, I have neither control nor influence on what the parties do. My observation has been Republicans claim they will reduce debt, but fail to do so (in fact, they usually raise debt, by spending more money they don’t have). Democrats claim they will raise taxes, and usually succeed in doing so (but almost always spend more money they don’t have). Net/Net: Debt goes up; taxes go up; both parties spend more than they take in; neither party has sufficient incentive nor disincentive to change their wicked ways.
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Yep. I think it’s not two parties, but actually a ‘uni-party’ with the same fiscal & foreign policy. Hopefully, neither side will win a clean sweep in 2020 and we’ll all benefit from the ensuing gridlock. A divided government is limited in its power to be ‘helpful’. 😉
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Today’s update on how the Uni-Party is doing in 2020, via WSJ headline: “ U.S. Debt Is Set to Exceed Size of the Economy for Year, a First Since World War II” — for shame, forever.
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I agree with Henry David Thoreau: “I heartily accept the motto, – ‘That government is best which governs least’; and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which I also believe, – ‘That government is best which governs not at all’”
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Thoreau, who passed away during the Civil War would be astonished to see the size & reach of government today. And, that people are still arguing about the Civil War!
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I’m with you both guys!…The government over-run is rampant (on both sides of the aisle). I fear, with the raging deficit, that we are only headed for more and more government as the “solution to all our problems”. We’d be much better off to reduce it (Govt) significantly. As for the newly proposed 401k plan…I definitely don’t want a 50+ year, life-long politician “fixing” my retirement funds at this point. It’ll only mean more taxes and more waste of our hard earned money in the long run. Less (Govt) is best…
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“The government is best that governs least” 😉
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