Lawmakers considering reducing cap on retirement accounts
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Posted Oct 20, 2017, 4:04 PM UTC
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Currently the previous post on new: https://www.reddit.com/r/financialindependence/comments/77mvxr /talk_of_retirementsavings_cap_rattles_financial/
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whoops, i guess i should have sorted by new. i looked but didn't see it posted.
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You soulless bastards, I just want to save so I don't work my bones off in old age and you're getting rid of it to cut Andy Puzder's marginal tax rate. Unbelievable.
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It appears only a lower limit on traditional contributions. Unfortunately though for the FIRE community that generally has significantly higher earnings before retirement than after this is a major blow. You want to defer taxes when earning the most. It also largely blocks common methods such as the Roth conversion ladder by limiting the amount of traditional funds to use for the ladder.
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Extra-click-baity because the article goes on to say that most likely if something like this were to happen, they'd still let us contribute up to the 18k, the rest of the 15.6k would just have to go into Roth.
I'm kinda borderline at this point whether it makes sense to start putting more into Roth savings anyway - I'd rather keep it closer to even, but if they made me skew more towards Roth, it wouldn't be totally the worst thing ever. Way different than just cutting off my tax-sheltered savings completely.
edit: if the reason to go one way or the other is because traditional 401ks give asset managers more money in fees, then freaking screw them. Tempted to go more into Roth just due to that quote at the end. :p
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i'm actually not doing roth 401k or ira. do people really expect their taxes to be higher in retirement than they are now? i mean, i expect my income to come from dividends and long term capital gains in retirement, which should make the tax rate lower (but hey, who knows what'll happen in a few years).
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I'm not expecting it to be higher, nor am I expecting it to not be higher - I totally don't know for sure, which is why I do both. (That and I don't know what tax loopholes will have been closed, or what new ones will have opened, or what else might have changed in another 10+ years, so I figure it's good to keep my options as open as possible.)
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Roth isn't usually good for people doing FIRE
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Was this removed by the mods or OP?
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must have been mods.
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How would the cap that low benefit anyone?
it would benefit the budget, by allowing the additional $15.6k (going by next year's 401k limit) to be taxed instead of contributed to your 401k untaxed. that way, they can cut taxes for rich people and still say they're balancing the budget by increasing tax revenue.
While that makes perfect sense, wouldn't all the brokers and lobbyists be throwing a massive fit about all the revenue lost that they can't charge a fee for anymore?