(11-01-2017, 02:28 PM)MalabarJag Wrote:

(11-01-2017, 06:28 AM)The Real Marty Wrote: What do you guys think about the idea of cutting way back on the deductibility of 401k contributions?  

The government giveth with one hand and taketh back with the other.

Roth IRAs are non-deductible. The tax is collected up front, and then there's no tax on them when it comes time to spend them. So if the money spent on traditional 401-Ks are taxed, people would choose Roth IRAs. That helps the government's bottom line now, but it loses revenue in the future.

That's assuming the government doesn't turn around and change the law sometime down the road so that Roth IRAs can be taxed. Frankly, I don't trust them.

In either case, taxing 401-K contributions would result in less money set aside for retirement. That's incentivising a bad choice.

I have always done Roth deferred 401K's at my past 2 jobs. That means that everything YOU put in is pre-taxed like a Roth IRA, but your companies match isn't. Typically when I have left a job with this type of 401K and liquidate the account, you get 2 separate checks for roth and non-roth.

In any case, the benefit of a 401K over an IRA is the employer match. Hope that doesn't go away.

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