Say Good-Bye to 401K and IRA

[Michael G.]

Looks like this might happen for the future. :shrug:

Clark Predicts Traditional 401(k)s, IRAs Will Cease To Exist Within a Decade (https://clark.com/personal-finance-credit/investing-retirement/traditional-401ks-iras-will-cease-to-exist-prediction/?utm_source=Email&utm_medium=Newsletter&utm_campaign=ClarkDailyNewsletter)

[Stu from NYC]

Saw that this morning. Govt has been casting an eye on those funds for years thinking of ways to spend it.

[retiredguy123]

Saw that this morning. Govt has been casting an eye on those funds for years thinking of ways to spend it.
Yet, they recently raised the required minimum distribution (RMD) age, delaying the collection of millions of dollars in taxes.

[tophcfa]

Fishing to find ways to raise more revenue to pay the interest on all that debt. Feel bad for the younger generations, no easy way out.

[dewilson58]

Clark Predicts

Do people actually listen to this guy????


:1rotfl::1rotfl::1rotfl:

[Altavia]

"Money in traditional 401(k) and IRA plans represent “tax time bombs” for people. Because the IRS ultimately taxes every dollar in there, including all investment earnings. So there’s no incentive for the federal government to seize those funds."

Not so sure that would be a bad thing for some younger people.

It's not unusual to end up paying more taxes on your RMD withdrawals than you would have payed in tax on on money earned 20-30 years ago.

[Stu from NYC]

"Money in traditional 401(k) and IRA plans represent “tax time bombs” for people. Because the IRS ultimately taxes every dollar in there, including all investment earnings. So there’s no incentive for the federal government to seize those funds."

Not so sure that would be a bad thing for some younger people.

It's not unusual to end up paying more taxes on your RMD withdrawals than you would have payed in tax on on money earned 20-30 years ago.

The key word is ultimately, they want to get their hands on the money sooner.

[Stu from NYC]

Yet, they recently raised the required minimum distribution (RMD) age, delaying the collection of millions of dollars in taxes.

that was surprising but in the long run with an extra few years to appreciate they should collect more in taxes. However doubt that was the thought behind the delay.

[huge-pigeons]

This doesn’t impact retirees. In fact, they have been raising the age to take rmd’s. It makes sense that the government would want all workers to use Roth’s so they get their taxes now, not decades down the road.
What’s more scary is the chatter of taxing unrealized gains. They have tried to enact this a decade ago and it failed but there is new chatter occurring now.

[spinner1001]

Do people actually listen to this guy????


:1rotfl::1rotfl::1rotfl:

Never heard of him. I had to look up who he was. He’s an author and media personality. So he’s definitely someone who can predict what Congress will do over the next decade.

Doing away with IRAs and 401ks will literally take an act of Congress. That’s something that will certainly be popular and get politicians reelected.

[dewilson58]

Never heard of him. I had to look up who he was. He’s an author and media personality. So he’s definitely someone who can predict what Congress will do over the next decade.

One of the "local" news programs run him once-in-a-while.

His advice is for, "I have not brain, tell me something". :MOJE_whot:

[retiredguy123]

Clark Howard is a very famous cheapskate who has provided advice about money on radio and TV shows and podcasts for many years. I don't know about his ability to predict what the Government will do, but I respect him as a cheapskate and for providing valuable consumer advice.

[blueash]

Firstly, the claim in his article about needing to make changes to increase the amount collected for Soc Sec is completely bogus. Money deferred into a 401K or IRA does not avoid FICA in the year it is earned.

Secondly, not clearly covered in the article. There are bipartisan efforts do to away with retirement plans that involve the workplace or at least make plans available to those not tied to an employer. A large number of small businesses and all gig workers have no option to save money other than the personal IRA which is limited.

So, there are those who want to make a 401K style option for individuals that you would open once and it would move with you from workplace to workplace. No more vesting and rolling over. You open it and you use it for employer and self earned income.

[MrFlorida]

Nothing to worry about, most of us won't be around anyway.

[spd2918]

No one is looking to get rid of IRAs. The government knows it will get more tax money down the road out of these programs.

The article is clickbait.

[lmack]

Never heard of him. I had to look up who he was. He’s an author and media personality. So he’s definitely someone who can predict what Congress will do over the next decade.

Doing away with IRAs and 401ks will literally take an act of Congress. That’s something that will certainly be popular and get politicians reelected.

:1rotfl:

[kkingston57]

Saw that this morning. Govt has been casting an eye on those funds for years thinking of ways to spend it.

How can government spend it? They are in private broker, insurance and bank accounts. People need to wise up. These are basically tax deferrals and a lot of the savers are paying more in taxes since they now make more than when they were working,

[kkingston57]

Do people actually listen to this guy????


:1rotfl::1rotfl::1rotfl:

Never heard of hm and did read the article. 1% chance that this will occur,

[GoRedSox!]

I usually like Clark Howard, but I disagree with him on this.

As a matter of public policy, lawmakers know that Social Security alone will not be enough income in retirement for most people. Without tax deferred retirement plans, many many more people will not invest in their own futures.

They will reduce the age for RMD’s or tighten up income limits for full deductibility before they do this.

Some folks also use HSA’s as retirement vehicles.

We need more savings for retirement, not less.

[Stu from NYC]

How can government spend it? They are in private broker, insurance and bank accounts. People need to wise up. These are basically tax deferrals and a lot of the savers are paying more in taxes since they now make more than when they were working,

They can spend it by getting their hands on it earlier. Not saying they will be reduce the age for RMD or amount you can put in 401 or IRA.

The current deficits we are running on not sustainable.

[jimjamuser]

Yet, they recently raised the required minimum distribution (RMD) age, delaying the collection of millions of dollars in taxes.
Because people are living longer. No one can say that is a BAD THING!

[jimjamuser]

Fishing to find ways to raise more revenue to pay the interest on all that debt. Feel bad for the younger generations, no easy way out.
The way, WAY bigger problem is the millions of unwanted aliens entering from the southern (and other) border. With A.I. and robotics improving those people will jack up the unemployment to as much as 30%

[jimjamuser]

Never heard of him. I had to look up who he was. He’s an author and media personality. So he’s definitely someone who can predict what Congress will do over the next decade.

Doing away with IRAs and 401ks will literally take an act of Congress. That’s something that will certainly be popular and get politicians reelected.
Why would it be " POPULAR" to eliminate methods of SAVING money for the FUTURE?????

[retiredguy123]

Because people are living longer. No one can say that is a BAD THING!
It's not a bad thing for retirees, but it is a bad thing for the Government because it reduces revenue to a country that is $34 trillion in debt.

[jimjamuser]

How can government spend it? They are in private broker, insurance and bank accounts. People need to wise up. These are basically tax deferrals and a lot of the savers are paying more in taxes since they now make more than when they were working,
Theoretically, a person that makes a lot of money pays more taxes (income taxes). I have always said that I want to pay as much taxes as possible. That just means that you are successful. The government (both state and federal) NEED MONEY. Individuals DEPEND on government to provide an army and police and etc. How they COLLECT taxes is completely arbitrary. They make up rules and then they can change the COLLECTION rules. But, as an individual, you can't repel a Russian invasion by yourself!

[jimjamuser]

It's not a bad thing for retirees, but it is a bad thing for the Government because it reduces revenue to a country that is $34 trillion in debt.
National debt numbers are totally meaningless !!!!!!The number appears scary today because interest rates are high. And I could collect all the money in a heartbeat just by making the rich class like Musk and etc pay their fair share. In the 1960 part of the reason there was a solid middle class was that the upper classes paid more taxes. They slowly change it to suit themselves and we were like a frog in hot water, we did not complain because it happened slowly.

[Stu from NYC]

National debt numbers are totally meaningless !!!!!!The number appears scary today because interest rates are high. And I could collect all the money in a heartbeat just by making the rich class like Musk and etc pay their fair share. In the 1960 part of the reason there was a solid middle class was that the upper classes paid more taxes. They slowly change it to suit themselves and we were like a frog in hot water, we did not complain because it happened slowly.

Lets have the rich pay their fair share whatever that might be. The money they would invest and supply jobs now goes to the govt which has no clue how to do the same thing efficiently.

[Maker]

Lets have the rich pay their fair share whatever that might be.

If every "rich" person like Musk was taxed at 100%, and all their assets were seized, it would barely make a dent in the national debt. There isn't enough of them to make a difference. It sounds great, but in reality it is a stupid concept to believe in. Politics 101.

"Make the big corporations pay their fair share" really means to raise taxes on all of us. Those taxes will get passed down as higher prices to everyone that buys their products.

Raising taxes has the effect of reducing how much money people have to spend on goods and services. That directly hurts the economy. As businesses sell less, their profits go down. Then, to stay profitable, they raise prices and lay off workers. That's another hit to the economy; less people buying things. And the cycle repeats.

Raising taxes is not the solution. A balanced budget is the first step. Live within your means. Grow the economy and tax revenue will go up. Use that to pay down the national debt. Stop spending double the amount of money coming in.

[spinner1001]

National debt numbers are totally meaningless !!!!!!The number appears scary today because interest rates are high. And I could collect all the money in a heartbeat just by making the rich class like Musk and etc pay their fair share.

The national debt is now $35 Trillion. The entire USA GDP for 2023 was $27 Trillion. For 2022 (latest data available), IRS collected $3 Trillion of all individual, estate, and trust taxes. Please tell us how to collect $35 Trillion (that’s trillion, not billion) more in taxes in a heartbeat. You did say heartbeat, right?

Math is hard.

By the way, your Modern Monetary Theory (MMT) that you probably saw on MSNBC has been largely discredited by mainstream economists.

Understanding the National Debt | U.S. Treasury Fiscal Data (https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/)

Access Denied (https://www.bea.gov/news/2024/gross-domestic-product-fourth-quarter-and-year-2023-advance-estimate)

SOI Tax Stats - IRS Data Book | Internal Revenue Service (https://www.irs.gov/statistics/soi-tax-stats-irs-data-book)

Breaking down a popular economic theory for some 2020 candidates (https://www.msnbc.com/velshi-ruhle/watch/breaking-down-a-popular-economic-theory-for-some-2020-candidates-1442064451899)

[huge-pigeons]

Fair share? The rich pay most of the taxes now! Do you think the poor pay the most? The poor consume the most.
Be careful on who you call the rich. Look at the link below and the top 1% incomes aren’t that much or a lot lower than you think, a lot of us in TV make this in the stock market each year while playing softball.

We should have a flat tax that everybody pays, no adjustment if you’re poor or if you are rich.
And who determines who is poor and who is rich? According to stats, something like 70% of people in the country can’t afford to pay for a $1000 expense. Look at the stats for retirees, 70-80% have something like a few hundred thousand saved for retirement, which is sad. I know people throughout their careers making good money but spent most of it every month and now they have nothing for retirement.
We should not condemn those that worked hard, saved, maybe worked multiple jobs to save for retirement and then tax them unfavorably to pay for somebody that didn’t save or didn’t work much.

What the Richest 1% Pay in Taxes in Your State (https://finance.yahoo.com/news/richest-1-pay-taxes-state-144315861.html#)

[Girlcopper]

Nothing to worry about, most of us won't be around anyway.
I was going to say the same thing. So? Who cares?

[Boomer]

If I were a millennial right now, I would be looking into funding my 401 up to any match and then go Roth for retirement and also understand what an HSA can do. (I wish we had one. Medicare supplement costs can be nuts but we keep on paying through the nose for our Plan F and will continue to do so. Retired before HSAs were a thing.)

Notice I said “looking into” because I have no idea because I cannot predict the future. But millennials need to learn this stuff.

I am not worrying about things like unrealized gains and means-testing, for now, because the clown show is not about to do anything that would harm themselves and their heirs. . . I think they visit the step-up in basis from time to time, but that would hurt their heirs too much. Ever noticed how so many of them go in with nothing much and end up with a big increase in net worth. Hmmmm.

Actually, I do see SS means-testing as a possibility. So unfair. Probably would not hit boomers, but could happen eventually for the rest.

There are changes coming for us regular people that were built in to the tax law changes from the last administration. I don’t think the billionaires and corporations will have to change their tax-planning, but we peasants might. I have not looked at the changes yet but I think 2025 is when they happen. Soooo, “Film at 11” — maybe.

Boomer

[opinionist]

We have bigger problems than IRAs. The average lifetime of a fiat money system is 50 years. Nixon took us off the gold standard in 1971 and we are overdue for a financial system collapse. This can happen in two ways. Russia defaulted on their government bonds and creditors got nothing for their investment. Russia suffered with no credit for years but recovered with little debt today. The Weimar Republic printed money to pay off their debt. It took a wheelbarrow of cash to buy a loaf of bread. The currency was cancelled and a new currency established. What would be your choice for the US dollar?

[jimbomaybe]

National debt numbers are totally meaningless !!!!!!The number appears scary today because interest rates are high. And I could collect all the money in a heartbeat just by making the rich class like Musk and etc pay their fair share. In the 1960 part of the reason there was a solid middle class was that the upper classes paid more taxes. They slowly change it to suit themselves and we were like a frog in hot water, we did not complain because it happened slowly.
This could work, until you runout of other people's money , yes there are some who got there through illegal and unethical means a minority , businesses create wealth, the Steve Jobs, Sam Walton, Bill Gates, Jeff Bezos have enriched everyone in ways few appreciate, there has never in the history of the world been a time or place that has given more material wealth and security to a larger part of the population with as little effort as we have today, that wealth was not created by any government

[Justputt]

Firstly, the claim in his article about needing to make changes to increase the amount collected for Soc Sec is completely bogus. Money deferred into a 401K or IRA does not avoid FICA in the year it is earned.

Secondly, not clearly covered in the article. There are bipartisan efforts do to away with retirement plans that involve the workplace or at least make plans available to those not tied to an employer. A large number of small businesses and all gig workers have no option to save money other than the personal IRA which is limited.

So, there are those who want to make a 401K style option for individuals that you would open once and it would move with you from workplace to workplace. No more vesting and rolling over. You open it and you use it for employer and self earned income.

Keogh plans have been around for decades for the self-employed. More work to keep up, but much higher limits than a SEP or one-participant 401(k). I don't see 401k, 403b, etc. going away since they are a perk companies use to attract people offering matches, etc. What they really need is a low maintenance Keogh or lift the limits on IRAs, etc. While the 401k isn't portable, you can keep what you have, roll it into a new one, roll it into an IRA, etc. I like these plans because the come with financial advisors whose job is to keep an eye on things; something I haven't always been able to do.... and paid the price for it.

[Cybersprings]

I was going to say the same thing. So? Who cares?

This was the only thread in today's email that I had any interest in at all. Should I learn from this poster that I need to go to all of the other threads and post "Who cares?" or should I continue to be polite and just scroll past the other ones and not feel the need to post (or read)?

[Cybersprings]

National debt numbers are totally meaningless !!!!!!The number appears scary today because interest rates are high. And I could collect all the money in a heartbeat just by making the rich class like Musk and etc pay their fair share. In the 1960 part of the reason there was a solid middle class was that the upper classes paid more taxes. They slowly change it to suit themselves and we were like a frog in hot water, we did not complain because it happened slowly.

Please explain what "their fair share" means." Does the top 1% of income earners paying 46% of all the taxes collected in the U.S. equate to getting off free in your book?

[Cybersprings]

Theoretically, a person that makes a lot of money pays more taxes (income taxes). I have always said that I want to pay as much taxes as possible. That just means that you are successful. The government (both state and federal) NEED MONEY. Individuals DEPEND on government to provide an army and police and etc. How they COLLECT taxes is completely arbitrary. They make up rules and then they can change the COLLECTION rules. But, as an individual, you can't repel a Russian invasion by yourself!

You do realize you are more than welcome to pay more at any time. Send your donation to the Treasury’s Bureau of the Public Debt. Your money will go into a special account to redeem outstanding government notes, bills, and bonds.

[Stu from NYC]

If every "rich" person like Musk was taxed at 100%, and all their assets were seized, it would barely make a dent in the national debt. There isn't enough of them to make a difference. It sounds great, but in reality it is a stupid concept to believe in. Politics 101.

"Make the big corporations pay their fair share" really means to raise taxes on all of us. Those taxes will get passed down as higher prices to everyone that buys their products.

Raising taxes has the effect of reducing how much money people have to spend on goods and services. That directly hurts the economy. As businesses sell less, their profits go down. Then, to stay profitable, they raise prices and lay off workers. That's another hit to the economy; less people buying things. And the cycle repeats.

Raising taxes is not the solution. A balanced budget is the first step. Live within your means. Grow the economy and tax revenue will go up. Use that to pay down the national debt. Stop spending double the amount of money coming in.

Very well said. Amazing how many people do not understand basic economics.

[Gigi3000]

Fishing to find ways to raise more revenue to pay the interest on all that debt. Feel bad for the younger generations, no easy way out.

I've read that inflation will continue due to the national debt being so high. The national debt has lowered our credit rating. Worry for my kids.

[Stu from NYC]

I've read that inflation will continue due to the national debt being so high. Not sure what the relation is exactly but worry for my kids.

Worry that SS will not be able to pay out according to their promises in a few years as the system is broken.

[Gigi3000]

If every "rich" person like Musk was taxed at 100%, and all their assets were seized, it would barely make a dent in the national debt. There isn't enough of them to make a difference. It sounds great, but in reality it is a stupid concept to believe in. Politics 101.

"Make the big corporations pay their fair share" really means to raise taxes on all of us. Those taxes will get passed down as higher prices to everyone that buys their products.

Raising taxes has the effect of reducing how much money people have to spend on goods and services. That directly hurts the economy. As businesses sell less, their profits go down. Then, to stay profitable, they raise prices and lay off workers. That's another hit to the economy; less people buying things. And the cycle repeats.

Raising taxes is not the solution. A balanced budget is the first step. Live within your means. Grow the economy and tax revenue will go up. Use that to pay down the national debt. Stop spending double the amount of money coming in.

Letting migrants in would help grow the ecomony as they start businesses.

[Pugchief]

I've read that inflation will continue due to the national debt being so high. Not sure what the relation is exactly but worry for my kids.

Not sure why you would make this comment without understanding. You should indeed worry for your kids, but inflation is caused by printing money out of thin air. More money supply = inflation.

[Pugchief]

Letting migrants in would help grow the ecomony as they start businesses.

You clearly also don't understand this. The problem isn't immigration, it's illegal immigration and welfare handouts to the "migrants". If the gravy train was cut off, there wouldn't be a problem.

[JMintzer]

National debt numbers are totally meaningless !!!!!!The number appears scary today because interest rates are high. And I could collect all the money in a heartbeat just by making the rich class like Musk and etc pay their fair share. In the 1960 part of the reason there was a solid middle class was that the upper classes paid more taxes. They slowly change it to suit themselves and we were like a frog in hot water, we did not complain because it happened slowly.

Still bangin' that drum, I see...

Fact is, "the rich" actually paid LESS taxes (as a percentage of their income) in 1960 than they do today...

I've given you this FACTUAL information, time and time again, yet you continue to ignore it...

You could tax all of the millionaires and billionaires incomes at 100% and it wouldn't make a dent in the National Debt...

[JMintzer]

You clearly also don't understand this. The problem isn't immigration, it's illegal immigration and welfare handouts to the "migrants". If the gravy train was cut off, there wouldn't be a problem.

Correct. And we would still get plenty of "legal" immigrants...

[Stu from NYC]

Still bangin' that drum, I see...

Fact is, "the rich" actually paid LESS taxes (as a percentage of their income) in 1960 than they do today...

I've given you this FACTUAL information, time and time again, yet you continue to ignore it...

You could tax all of the millionaires and billionaires incomes at 100% and it wouldn't make a dent in the National Debt...

Some people do not want to change their preconceived thoughts no matter how many people show them they are wrong

[Gigi3000]

Not sure why you would make this comment without understanding. You should indeed worry for your kids, but inflation is caused by printing money out of thin air. More money supply = inflation.

The higher cost of borrowing filters into prices too

[jimbomaybe]

The higher cost of borrowing filters into prices too
Cheap money encourages spending = + inflation, expensive $ discourages spending reduces demand less inflationary pressure

[Caymus]

Cheap money encourages spending = + inflation, expensive $ discourages spending reduces demand less inflationary pressure

That is only f you are spending your own money. "People" that spend other's money don't care.

[Pugchief]

The higher cost of borrowing filters into prices too

It affects prices, but not inflation. If you pay cash for a house or car, the prevailing interest rates are irrelevant.

Again: Inflation is literally a relative increase in the money supply, AKA federal money printing.

Inflation occurs when the supply of money increases relative to the level of productive output in the economy. Prices tend to rise because more dollars are chasing relatively fewer goods. Another way of stating this phenomenon is that the purchasing power of each money unit declines. Investopedia (https://www.investopedia.com/ask/answers/what-is-inflation-and-how-should-it-affect-investing/)

[Stu from NYC]

It affects prices, but not inflation. If you pay cash for a house or car, the prevailing interest rates are irrelevant.

Again: Inflation is literally a relative increase in the money supply, AKA federal money printing.

Investopedia (https://www.investopedia.com/ask/answers/what-is-inflation-and-how-should-it-affect-investing/)

If a companies borrowing costs go up they will do their best to increase prices for their product. That is inflation

[jimbomaybe]

That is only f you are spending your own money. "People" that spend other's money don't care.
The effect is the same in any event " One's demeanor at the feast depends on who's ox was gored to produce said feast"

[jimbomaybe]

If a companies borrowing costs go up they will do their best to increase prices for their product. That is inflation
Low interest rates stimulate spending, economic activity, higher rates cool down the economy , that why the fed adjusts the interest rate, if any cost go up it will of course put pressure to raise the prices of goods and services business , taking out a loan for day to day expenses doesn't sound like a winning business plan, taking out a loan or floating a bond issue to expand a business, different, high rates discourage that depressing economic activity

[Pugchief]

If a companies borrowing costs go up they will do their best to increase prices for their product. That is inflation

No, it isn't. Did you read the linked article?