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?
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