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No. Savings is a choice. If you choose not to, I would not be in favor AT ALL of taxing someone as a punishment. If you want to encourage people to save for retirement, give those that take advantage of saving more tax breaks that way. Granted, that seems to "reward the fiscally healthy" which everyone hates but I believe it carrots rather than sticks for the most part.
Last edited by ChristineVA; 05-24-2022 at 12:41 PM..
As a mechanism to make it more attractive for employees to contribute savings towards their own retirement, while also helping those Americans later on have solvency , while also helping them today take courses of action which will help them reduce their own tax burden by deferring more income
And by not doing these things, a penalty tax will be an additional source of Govt revenue to pay the national debt. It probably would be hated but actually very constructive especially that it forces Americans to take retirement more seriously
What could be done is any American with a job offering a 401k benefit who contributes less than 7% of pretax income to the 401k, maybe make it 25% of the amount of the pretax money retained by thwarting those contributions must be paid to IRS annually using After-tax dollars …. So more like a 50% of savings pinch
I think your idea of a penalty tax for not contributing to a 401k would go the same way as the penalty tax that was originally attached to the ACA for those not purchasing health insurance.
Encourage people to save for retirement? Great. Give tax incentives on money saved? Sure thing. Financially penalize people for not saving? No thank you.
The government already forces people to contribute to the bottomless pit known as Social Security, and then uses those "contributions" for other people. I'd be OK if they forced people to contribute to their own 401k's, which are owned and controlled by the beneficiary for the specific use as a retirement fund for that person.
Quote:
Originally Posted by Freesponge
Yes that would be the plan.
only - ONLY - if we cut required SS to 2% and allowed us all to opt out of the other 4%. And I suppose for some that have worked many years, an actuarial assessment that you've effectively paid your 2% to 65, you can opt out.
You're a "government will/should take care of me" and want to stick with SS? You're free to do so.
only - ONLY - if we cut required SS to 2% and allowed us all to opt out of the other 4%. And I suppose for some that have worked many years, an actuarial assessment that you've effectively paid your 2% to 65, you can opt out.
You're a "government will/should take care of me" and want to stick with SS? You're free to do so.
I should have clarified my position. I'm in favor of the OP's plan IF the money that is added to a 401k is switched from the money that would have been added to Social Security. The government has been "taking care of me" for as long as I've been earning money, so that issue has long since been settled. But I'd rather the money that they take from me go to an account that is usable by me only, instead of it being used to pay current beneficiaries instead of saving it up for me.
Most places with 401k's have a company match at 50-100%.
By not putting money in, they're already getting penalized to the tune of that lost match.
Since there is already a mandatory retirement contribution plan in place (Soc. Security), the entire idea just seems redundant.
While making contributions may be the wise long term play, forcing people to do it twice I just can't get behind.
If my company matched that much, I would be putting the max in every year. But they only match around $12K a year, so that is all I contribute.
I prefer investing in assets that earn income, and by income, I dont mean measly dividends. So the OP's plan is a terrible idea.
But matching is another story. I don't leave money on the table.
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