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Squidboy October 31st, 2014 2:17pm

The US Govt. has an annual limit on 401k and IRA contributions which subsequently limits retirement income from these sources. However, there is no similar limit on public pensions. Would you rather cap pensions or uncap 401k/IRA contributions?

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11/02/14 2:29 pm

Bush tried to uncap 401k's and the left attacked him

11/02/14 12:07 pm

I don't think there should be a tax break on anything, including retirement. I also don't think the government should give money to any individual or business either. No exceptions. This would make a cap mute.

11/02/14 12:09 pm

Basically if you don't save money then you will need to work your entire life. That should be enough incentive to save for retirement. Life is not fair, get over it!

cpaswr just say the letters
11/01/14 9:11 pm

I can't complain about the 401k cap which is currently $17.5k and increasing to $18k in 2015. The IRA cap is also increasing.

11/01/14 9:43 am

They should do everything to encourage people to save for retirement. However, maybe reducing the tax benefit would be in order.

TreeHugs Oregon
10/31/14 4:51 pm

Removing the cap on IRA/401k contributions would just create a giant loophole for wealthy folks to get out of paying taxes. Middle class folks typically can't afford to put in enough to worry about a cap.

Zod Above Pugetropolis
10/31/14 1:51 pm

Isn't the IRA cap just the amount that is tax deferred? I thought excess contributions could be made, but that they (and the earnings on them) would be taxed, but at a low rate. I've never done it. Some limit on tax deferment seems reasonable.

Squidboy Snarkapottamus
10/31/14 2:10 pm

yes - but take away the tax deferment on contributions and earnings and there is a lot less incentive. Better off at that point investing in real estate or directly in the stock market.

10/31/14 5:06 pm

There is plenty of freedom to invest, just not to invest tax-free money.

10/31/14 7:25 am

Encourage Americans to save instead of incessant buying? Absolutely. Uncap!!

Good luck with that. :-/

sojourner present
10/31/14 7:39 am

Few people max out their 401(k) anyway. I doubt uncapping it will make any difference.

ovcourse California, FJB
10/31/14 8:01 am

It would make a difference to me.

sojourner present
10/31/14 8:06 am

We have to look at such policies from a national perspective. You can still save over the The max amount, just not in a 401(k). You can't get tax deferment on it. However uncapping would only give preferential tax treatment to the wealthy.

sojourner present
10/31/14 8:07 am

It would not be available to the vast majority of middle or lower class individuals. What benefit is it to the country to give yet more preferential tax treatment to the wealthy?

ovcourse California, FJB
10/31/14 8:27 am

Few people - at least middle class - max out their 401K because they prefer eating out, vacationing in Mexico, destination weddings, spa treatments, spending hundreds of dollars on NFL tickets, cable, data plans, Starbucks, etc.

sojourner present
10/31/14 8:33 am

Agree, over, but uncapping won't change that.

Squidboy Snarkapottamus
10/31/14 2:07 pm

Sojourner - you are 100% correct on 401k. But why do we allow completely unchecked public pensions at taxpayer expense? I'm fine with leaving the 401k limits as they are and removing income restrictions off of IRAs. However - I feel there needs

Squidboy Snarkapottamus
10/31/14 2:08 pm

to be an equivalent check in place for public pensions. What prompted this thought was Obama's thoughts on 401k balances exceeding 3M. Which is exceptionally difficult to achieve - and equates to a 120k/year pension. Nice - but not wealthy.

Squidboy Snarkapottamus
10/31/14 2:08 pm

so why does the government feel that they can go after savings ...but not pensions? here is one recent article -

sojourner present
10/31/14 2:41 pm

I'm not necessarily disagreeing with you on pensions. But pensions, other than govt ones, are starting to disappear. But what policy are you going to promote by uncapping?

Squidboy Snarkapottamus
10/31/14 2:47 pm

None other than equity between private and public sector.

sojourner present
10/31/14 7:21 am

Aren't most pensions defined contribution anyway? It's not a cap, but I don't see employers racing to contribute more and more to the pension funds. It's a comparison of apples to oranges I think.

Squidboy Snarkapottamus
10/31/14 7:47 am

Most pensions are considered 'defined benefit' and based on a combination of years of service and income. It's not uncommon for public sector ee's to have six figure+ pensions. Plus, pensions are often based on final year income - not a lifetime

Squidboy Snarkapottamus
10/31/14 7:48 am

of savings. It's close to impossible to accumulate a 2.5M balance in a 401k that would equate to a 100k/year income assuming a 4% withdrawal rate.

sojourner present
10/31/14 7:50 am

Sorry squid. I meant definedbenefit. I was multitasking and missed typed it. I'm still not sure that uncapping anything would change the amount the majority of Americans save.

sojourner present
10/31/14 7:54 am

Hubby and I try to max out everything. 401(k). 403B. Roth. 529 plans for the kids. We don't have enough money to max out the last. And saving as we do we are the anomaly not the rule. Uncapping would notsubstantially change our savings habits

ScottyDoesNo Stand back and stand by
10/31/14 7:19 am

Any time you keep money out of the hands of the federal government it's a good thing. Uncap.

sojourner present
10/31/14 7:22 am

None of the money in either my pension or hubby's401(k) or the 403(b) is in the govt's hands. Wallstreet's, yes. Govt. not so much.