The federal government should be able to pull in billions of dollars on 401k withdrawls. Let's look at a simple example. Worked Joe has taken $100,000 in 401k payroll deductions thru his life. Those contributions are all pre-tax. Joe has retired and his 401k is now worth $500,000. Joe retired. Joe starts to take $50,000 per year from his 401k plan. Now Joe is going to start paying taxes on his 401k. The federal government will start taxing Joe on $500,000 instead of $100,000.
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