This is from
Now that he has become “President elect” we all must take more seriously Joe Biden’s vision of current 401k plan
. It favors the rich dontcha know, and we can’t have that. unfairness
But not to worry, Biden will put everything right, especially if Democrats gain control of the Senate as appears likely shortly to ensue.
Link to Forbes piece
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As we saw last 4 years , presidents always make promises during campaigning that they don’t keep. When it becomes an actual bill we can take a closer look. Until then it’s all speculation
One big problem is that switching retirement contributions from a pretax to a tax credit system is that you lose the state tax deductibility. There are also issues when you withdraw and pay more taxes later. I discussed some of this here.
Here’s a very good article covering the likely / proposed Biden tax plan.
My quick takes
pretax 401k’s for high earners would be vastly worse, and somewhat worse for normal people who use them for tax planning / income reduction as well ( such as to keep AGI low enough for credit thresholds). This is because the proposal replaces the current non-taxability of such retirement contributions with a flat 26%(?) credit regardless of income. This gives more benefit to those in tax brackets low…
why it’s good to diversify tax strategies, with pre, post tax accounts.
With my luck, though I’ve always been in higher tax brackets during low tax years (wanting to convert to Roth for the past few years )