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View Full Version : House Democrats contemplate abolishing 401(k) tax breaks



Midnight Mike
10-27-2008, 08:40 PM
Goodness, this would suck if this went through!

http://www.investmentnews.com/apps/pbcs ... /310139971 (http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971)

Under Ms. Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3% a year, adjusted for inflation.

The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.

Higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined contribution plans, he said.

"If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets," Mr. Belluardo said.

http://www.investmentnews.com/apps/pbcs ... /310139971 (http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20081012/REG/310139971)