Does Biden’s 401(k) Plan Help or Hurt?
This Biden 401k related episode was drawn from John’s appearance on “Alabama’s Morning News with JT” on 105.5 WERG news radio. John and JT’s conversation revolved around the Biden Campaign’s proposed changes to 401(k) retirement accounts. They discuss what that means for retirement savers.
Don’t miss John’s takeaways:
- Right now, a 401(k) is a tax-deferred retirement savings vehicle:
- You contribute pre-tax dollars.
- You don’t pay taxes on that money until you begin withdrawing from the account in retirement.
- Your contribution lowers your taxable income.
- Biden would do away with the tax-deferral and the tax deduction and replace them with a 26% credit.
- Everyone that contributes would get the same 26% credit—a dollar for dollar reduction in their taxes.
- Most people in tax brackets lower than 26% are not likely to benefit as Biden expects because they already don’t save for retirement.
- People in the top tax brackets will lose their tax deduction—and it will hardly be offset by the 26% credit.
You’ll find many other great resources on our website, such as 19 Sources of Retirement Income, which offers ways to increase your existing retirement income.
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