Obama Wants to Cap Your 401(k)
Soon the government will just own everything and we’ll just use their stuff to do things.
Check it out:
Your 401(k) plan, there’s more information now about what’s about to happen to it if Obama gets his way. Obama’s new budget proposal aims to limit your nest egg by setting a cap on the amount of contributions you can make over the term of your life, and that number is $2.7 million. At $2.7 million you can no longer — if he gets his way, that would be the maximum size of your 401(k).
Now, Obama says the reason he’s doing this is to simplify the tax code. The proposal, if it becomes law, would be the first time there has been a limit on the balances one could build up in a defined contribution plan such as a 401(k) or an IRA. Peter Brady, a senior economist at something called the ICI, said, “The proposal to place a dollar cap on individual retirement saving accounts would add complexity and confusion to our nation’s system for retirement savings.”
Now, why would anybody do this? Let’s trace the history of the 401(k). I remember where I was when I first heard about it. Well, I don’t remember exactly. I don’t know if I was in Kansas City or I moved to Sacramento when this thing was first proposed. But, boy, it sounded like a good deal to me. What you could do was designate a certain percentage of your gross income to your 401(k) or IRA. And it was tax-free. That amount that you put in your retirement plan would be deducted from your gross earnings, and you would then pay your income tax on what was left. If you make 50 grand, you could put $5,000 away per year and your taxable income would be $45,000.