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The $302k in the Roth is NOT tax free. Income taxes are paid each year on the $5000/year that is added to the account yearly -which means $150k was income that was taxed as income the year it was earned. The $5k/year of income taxs are paid at the income tax bracket during working years, which is often a higher tax bracket than during retirement years.
Yes you pay tax when putting it in but after it is in it is tax-free. $1 in a roth account is worth more than $1 in a traditional account, because in the future you will have to pay tax on the traditional when you withdraw. Of course, you pay for that up front.
This lets you effectively shovel much more money into a roth than a traditional once you reach the point where you are hitting the maximum contribution limit.
That extra limit needs to be weighed against your estimate of the tax rate differential in making the call on what type of account to use.
Today it's the Repubs going after the 401K money. Yesterday it was the Dems going after 401k money.
Don't be naive. Both parties want their hands on that money. 401K's and IRA's sit there untaxed.
Congress has been eyeing and scheming ways to get their hands on that money for at least a decade now if not longer.
Congress is addicted to spending and the only way they can get more money is through us.
And they don't care that there's no more company pensions and that 401K/IRA is your means to save for retirement. They don't care.
This shouldn't become a partisan issue because both sides want their hands on this money which is in the tens of trillions.
All of us should fight this..both Dems and Repubs need to voice their disapproval of this idea.
"And they don't care that there's no more company pensions and that 401K/IRA is your means to save for retirement. They don't care."
I would much rather have a 401 then a company pension ANY DAY.
A company pension is ONLY good IF the company stays in business. (ask the pilots of United Airlines)
Generally speaking, employees can defer taxation on up to $18,000 a year with a 401k. The consideration on the table right now is reducing the annual cap to $2400.
47 states impose an income tax. One of the considerations on the table to eliminate the ability to deduct state income taxes.
Then there's the consideration to eliminate the deduction of property taxes.
Any/ all of this could dilute/ wipe out the impact of a reduction in Federal tax rates and would likely hit the middle class the hardest.
If you look at this logically, the state income and property tax deductions are the last ones that should be cut. Without those, we will be paying taxes on money we already paid in tax. Taxes on taxes?
I know mortgage interest and charitable giving deductions are popular and supposedly beneficial. But, again looking at it logically, why should someone who rents, or owns his home with no mortgage, subsidize those who choose to borrow? And why should an atheist or a proponent of one religion subsidize your donation to your chosen religion? Why should religious organizations get away without paying taxes?
The 401k deduction is somewhere in between. I think you could justify it if you look at it as part of a package, along with Social Security and Medicare, to help people fund their retirement. It would not be the first place I'd look to cut.
If you look at this logically, the state income and property tax deductions are the last ones that should be cut. Without those, we will be paying taxes on money we already paid in tax. Taxes on taxes?
I know mortgage interest and charitable giving deductions are popular and supposedly beneficial. But, again looking at it logically, why should someone who rents, or owns his home with no mortgage, subsidize those who choose to borrow? And why should an atheist or a proponent of one religion subsidize your donation to your chosen religion? Why should religious organizations get away without paying taxes?
The 401k deduction is somewhere in between. I think you could justify it if you look at it as part of a package, along with Social Security and Medicare, to help people fund their retirement. It would not be the first place I'd look to cut.
There should be no tax deductions for churches. Period. Let them pay for their fair share of government services.
Constitution is clear on government and religion and there is no good reason why taxpayers should be subsidizing the Catholic Church, or the Church of What's Happening Now.
We need to get religion out of government and this is a fine place to start.
It's very upsetting, the advantage to a 401k that is not taxed is that you can make withdrawals after you retire when your taxable income is less. Where's the motivation to save through a 401k otherwise? I understand that Trump sycophants will try to make this sound like a great idea but it's not, at least not for the middle class wage earner.
It's nice to know you are upset by something so vague that the CBO can't even estimate the impact yet.
Seems like the article worked just dandy fine.
P.S. When are they cutting social security? I heard they were going to do that too a while back. It's just soooo easy to rile up partisans, they'll believe just about anything.
It's nice to know you are upset by something so vague that the CBO can't even estimate the impact yet.
Seems like the article worked just dandy fine.
P.S. When are they cutting social security? I heard they were going to do that too a while back. It's just soooo easy to rile up partisans, they'll believe just about anything.
Thanks for telling me when it's appropriate to comment on an issue, I will definitely keep that in mind before I ever post here again
It's nice to know you are upset by something so vague that the CBO can't even estimate the impact yet.
Seems like the article worked just dandy fine.
P.S. When are they cutting social security? I heard they were going to do that too a while back. It's just soooo easy to rile up partisans, they'll believe just about anything.
The GOP is about cutting, privatizing SS is one of their great cuts. I know people will be saying look at the market.
Well look at the market starting in 2008 and remember what SS is for. The bad part for a large part of America SS and Medicare are all they have left.
Protect them do not cut them as the GOP budget passed by the Senate just did.
It's nice to know you are upset by something so vague that the CBO can't even estimate the impact yet.
Quote:
Originally Posted by 2sleepy
Thanks for telling me when it's appropriate to comment on an issue,
Please stop telling me what soup I'm allowed to have with my lunch.
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It's just soooo easy to rile up partisans, they'll believe just about anything.
