Tax deferment retirement funds

[fskimospy]

umm, I do pay taxes on it when taken out. It's not a loophole. There are no taxes being avoided.

What did you mean by "subsidize"? It's my money. How is "the system" being abused? Or is this just another class warfare ploy to "stick to the 'rich'"?

You're starting to sound like obama.

You pay a lower rate than you would otherwise. If you don't think you're paying less than you would otherwise, why the hell are you putting your money in a 401(k)? You must be the worst financial planner in the world.

 

[PokerGuy]

I'm not a business major (thank god), instead I am a policy analyst

hahaha, that explains your poor ability to grasp even basic economic and business concepts. We have a government full of "policy making" idiots who don't understand business..... hence the 16 trillion in debt.

 

[spidey07]

You pay a lower rate than you would otherwise. If you don't think you're paying less than you would otherwise, why the hell are you putting your money in a 401(k)? You must be the worst financial planner in the world.

LOL, 401k is already maxed out along with other retirement accounts. Then there's my big one, the nest egg that gets no preferential treatment.

But then I only pay 15% on any realized gains from that one. If I do it right I'll live off nothing but dividends. How's it feel to know I'll be paying less taxes than you?

In this thread the liberal is displaying their desire to go after your retirement accounts, just like they and the obama admin have been saying they would do.

 

[s0me0nesmind1]

Save as much money as you need for retirement after paying taxes on them. Tax deferment was meant as a way to encourage retirement savings but people are abusing the system to avoid taxes. And it's not the average Joe. Time to close the loopholes.

So responsible people are using the system as intended, while the average american is too stupid to take advantage of it (hence average across the board of all 401k is < $60k and 1/3 has less than $25k). So is that the name of the game? Punish the people with an IQ past 50? OH!

Apparently living on a budget is frowned upon, and we should all be debt stricken, sucking the government teet for reitrement, and bowing down to corporations when everything fails. That is PRECISELY what this is shooting for. There is absolutely NOTHING wrong with the concept of a 401k. Having a maximum contribution of $17.5k PER YEAR is jack shit even if you started maxing out from age 21 (which never happens unless already rich). Even still, it amounts to a measly retirement account that makes it so you don't have to depend on the government or social security when it's your time to step out of the workforce.

 

[fskimospy]

LOL, 401k is already maxed out along with other retirement accounts. Then there's my big one, the nest egg that gets no preferential treatment.

But then I only pay 15% on any realized gains from that one. If I do it right I'll live off nothing but dividends. How's it feel to know I'll be paying less taxes than you?

In this thread the liberal is displaying their desire to go after your retirement accounts, just like they and the obama admin have been saying they would do.

It doesn't feel like anything? I live quite comfortably, will be able to retire without difficulty, and I'm happy to hear that you can do the same.

 

[JTsyo]

So responsible people are using the system as intended, while the average american is too stupid to take advantage of it (hence average across the board of all 401k is < $60k and 1/3 has less than $25k). So is that the name of the game? Punish the people with an IQ past 50? OH!

Apparently living on a budget is frowned upon, and we should all be debt stricken, sucking the government teet for reitrement, and bowing down to corporations when everything fails. That is PRECISELY what this is shooting for. There is absolutely NOTHING wrong with the concept of a 401k. Having a maximum contribution of $17.5k PER YEAR is jack shit even if you started maxing out from age 21 (which never happens unless already rich). Even still, it amounts to a measly retirement account that makes it so you don't have to depend on the government or social security when it's your time to step out of the workforce.

This was the point of the OP, the tax is not punishment, it was the norm. The tax deferment was the carrot. Now that 2 of the 3 carrots are being proposed to be removed, you want to call it a stick.

The purpose of the reform is to prevent things like this.

 

[stlc8tr]

My guess is that you desperately want to have some sort of fight about that though because this will allow you to bravely thump your chest at the opposing political sports team.

Most folks are for cutting government spending unless it's spending that benefits them. When that happens, it's "hands off my hard earned money"!

 

[spidey07]

Most folks are for cutting government spending unless it's spending that benefits them. When that happens, it's "hands off my hard earned money"!

Retirement tax deferment is in no way shape or form government spending.

I keep asking what the liberal means by "subsidizing" as if they believe they are "giving" money to people.

 

[Genx87]

Refresh my memory on this one. What are the caps and which investment tool does it apply towards?

 

[IBMer]

I thought the reason this was suggested was to close the loophole the connected use. They have their company put a bunch of stocks in their 401K tax advantaged account that the company horrendously undervalues allowing the contribution to fit under the limit. And because they had control of the stock price its then worth a shit ton pretty quickly and the "earnings" can't be taxed again. I believe that was how Romney got his massive 401K. The 401K was obviously intended to get middle income people to save a reasonable amount for retirement, it wasn't intended to allow Romney to pay no tax on earnings from a king's ransom of stocks.

Seems that people keep missing this post.

This is about people like Romney who have 104million in an IRA. If there was an example of a democrat or anyone with that kind of IRA it wouldn't change my opinion. Its being used to game the system.

Retirement tax deferment is in no way shape or form government spending.

I keep asking what the liberal means by "subsidizing" as if they believe they are "giving" money to people.

I guess this is also because people like you think they don't get anything from the government because they aren't on welfare.

 

[s0me0nesmind1]

Seems that people keep missing this post.

This is about people like Romney who have 104million in an IRA. If there was an example of a democrat or anyone with that kind of IRA it wouldn't change my opinion. Its being used to game the system.



I guess this is also because people like you think they don't get anything from the government because they aren't on welfare.

Seems that people keep missing the point.

If you want to stop some kind of loophole that revolves around an IRA (completely different system by the way, different rules), why are you plugging legitimate dollars that could be made from the standard middle class?

Why can't you close a fucking loophole (that none of these articles can honestly give a valid explanation of how it's done)?

For the mentally retarded people whom preach business yet haven't taken a class on it. Use a simple retirement calculator. http://money.msn.com/retirement/401k-calculator.aspx

Set your years till retirement to 40 (And it could very well be more than that, step foot in the workforce around 20 - retirement age is advancing more and more). Now set your contribution to the limit of approx $17k. Derp derp, you just hit over $3m. You scumbag saver you!

 

[Brovane]

Gee how did people save for retirement before Tax Deferred retirement accounts?

 

[spidey07]

Gee how did people save for retirement before Tax Deferred retirement accounts?

Pension or other company plans that were part of their total compensation.

 

[s0me0nesmind1]

Gee how did people save for retirement before Tax Deferred retirement accounts?

They didn't. They died at a much earlier age.

Then after that, they depended on social security.

And then people with an IQ past 50 came along and said "Oh shit... social security is fucked. I better do something on my own instead of dependence D:"

 

[Exterous]

This cap is also indexed to inflation, something you could have easily checked for yourself before posting.

Yes - but we don't exactly know how. It could use the 'College Mini Fridge Inflation Index' for all we know

Granted I don't have a big issue with the lack of specificity as its still just a proposal

I don't think it's set to the $3.4 million limit but an annuity that would give $200K in retirement. It happens to be $3 million now due to low interest rates but as interest rates go up, the $3million should drop. Still if adjusted for inflation $200K should be plenty to subsidize.

My big issue with this is that, IMO, its needlessly complicated for the amount of money it will likely generate. The White House claims the cap will generate $9 billion over 10 years. I would love to see the math and assumptions behind this as I highly doubt we will get anywhere near that. I am willing to bet thats from trends based on historical data - which would assume people hitting the cap would blindly continue to contribute money to these select tax deferred accounts while many other tax deferred/tax free options exist.

Also - if Romney is the poster child of this how do they get $3M from $104M? Better to just set it to $5M and tie it to the same inflation index as SS. No complex recalculating or potentially decreasing cap each year and an extra $2M will leave more room for the self employed and is more out of reach for the middle class while still preventing Romney like abuses

Refresh my memory on this one. What are the caps and which investment tool does it apply towards?

$3.4 million total cap on all deferred investment accounts (Sum of 401k, 403b, 457, Roth tIRA etc). The cap is determined by whatever can generate a $205,000 annuity

But the cap will almost certainly change each year as a rise in interest rates will cause it to go down while whatever inflation index its tied to will cause it to go up

 

[piasabird]

Actually, the more money you save on a deferred basis the more tax you pay. This is just like a regular IRA. You put the money in a plan the money increases through investments and then you have even more money when you start taking it out. Then you pay taxes on what you withdraw.

I think you should not have to pay taxes on the interest, just what you deposited into the account.

Yes these tax deferred accounts make money on the money you put in them. Things like Interest, and Capital gains occur from the investments inside your tax free plan.

 

[Exterous]

Not to mention stock market tanks in relation to bad timing. If you retired when the housing bubble burst - that has got to suck DONKEY BALLS.


But in all honesty, there's no helping him. Obviously hasn't touched general accounting concepts or understood how cash flows. Yet somehow, eskimospy is an expert on dictating how our taxes should be spent :sneaky:

To be fair firecalc gives his figures a 100% chance of success over a 40 year retirement so that would be a 100% chance of success regardless of retirement date. You have to go out to $110,000 over 50 years to start having a chance of failure and even then its only 2% with an average balance of $14M

This is only based on historical data but thats a pretty damn good success rate in any event.

 

[JTsyo]

Not to mention stock market tanks in relation to bad timing. If you retired when the housing bubble burst - that has got to suck DONKEY BALLS.
...

as you get near to retirement, you need to rebalance your accounts to reduce risk. And you're giving eskimospy a hard time.

 

[stlc8tr]

Also - if Romney is the poster child of this how do they get $3M from $104M? Better to just set it to $5M and tie it to the same inflation index as SS. No complex recalculating or potentially decreasing cap each year and an extra $2M will leave more room for the self employed and is more out of reach for the middle class while still preventing Romney like abuses

Why not just rid of tax advantaged accounts altogether? That would make things even easier. I recall a recent paper saying that the tax advantage doesn't spur more savings. Just like the mortgage deduction doesn't spur higher levels of home ownership.

Let people who have existing accounts keep them but stop any new contributions from 2014 onwards.

 

[Brovane]

Pension or other company plans that were part of their total compensation.

Or they just saved post tax money and invested it. It isn't rocket science. People where saving money long before IRA's where allowed under tax law. My grandfather spent decades buying stock with money from each pay check before IRA's even existed. When he retired, between Social Security and his Dividend income himself and my grandmother lived very well. He didn't need any special tax breaks to save and to live securely in retirement.

 

[Anarchist420]

The govt needs to stop taxing retirees and I don't care if they got a fucking tax deferment when they were working or not.

They can just make social security optional.

 

[Brovane]

Retirement tax deferment is in no way shape or form government spending.

I keep asking what the liberal means by "subsidizing" as if they believe they are "giving" money to people.

It is kind of like the same thing when someone gets a special tax break for purchasing a electric car. You get a special tax break for a retirement account by being able to defer your taxes to a future date and save this pre-tax money in a special account.

 

[Blain]

Dodging taxes on retirement contributions today is fine, but what will tax rates be in 15-20 years from now, when due on money coming out of retirement accounts?

Are they guaranteed to be lower than current rates?

 

[Exterous]

Why not just rid of tax advantaged accounts altogether? That would make things even easier. I recall a recent paper saying that the tax advantage doesn't spur more savings.

What paper? I haven't seen anything remotely close to unbiased claiming that. There one one by a lady (name escapes me) that wants to kill the 401k program but she is hardly unbiased. There were several papers saying that there needs to be more studies done but I don't believe any really were.

In any event Americans do need to be incentivized to save for retirement and, if not a tax deferred program what do you suggest to instead?

 

[s0me0nesmind1]

Or they just saved post tax money and invested it. It isn't rocket science. People where saving money long before IRA's where allowed under tax law. My grandfather spent decades buying stock with money from each pay check before IRA's even existed. When he retired, between Social Security and his Dividend income himself and my grandmother lived very well. He didn't need any special tax breaks to save and to live securely in retirement.

Not sure what people such as yourselves are smoking - putting our money in a 401k does not avoid taxation. Quite the contrary, and could be quite the opposite. That is where people actually invest in ROTH 401k and ROTH IRA's for an advantage. Quite the risk actually, if you're set to retire and it starts during the next WW3 and tax is up to 75%... yeah, you will be paying that tax on it. Your only advantage is the ability to dictate how much you pull, hence determining what bracket you are in (assuming you can live within those means).

When you pull cash out, you have to pay taxation - I really think some people here need to do some basic accounting research before pulling shit out of their ass in a post about retirement accounts. But then again, I guess that's why we are in the situation we are in