Uh you know you can save more. Just not in a tax favored vehicle. No one is stopping you from actually saving more. Also, if you’ve got an HSA, max that out and keep all those savings for medical in retirement (you’re going to need it) and you triple tax advantages.
It’s indexed people. It’s not the president making this call. It’s written into the internal revenue code.
Different limits. You have deferral/Roth limits and annual addition limits. The latter includes deferral and Roth and any employer contributions (match or profit sharing) and traditional aftertax (non-Roth) contributions combined.
There are income limits for 401(k)s as well.
No government looks at the future taxes. They literally view any current breaks as tax expenditures (not kidding). So even if you’re going to pay taxes in the future they still only look at the current lost revenue.
No, it’s really revenue driven. They police the wealthy by implementing adp/acp, 410(b), and 401(a) nondiscrimination testing.
In my opinion the real problem is employers abdicated responsibility for helping their less sophisticated employees when they all abandoned defined benefit plans years ago in favor of defined contribution (like 401(k)) which places the primary burden on people who don’t know what they’re doing. 401(k) plans were meant to be supplemental to defined benefit plans, not meant to carry the full weight of retirement saving. It’s a shame.
Very smart. They’ll thank you later in life.
Yes auto features are the future for retirement savings. Auto enroll, auto escalation, and target date funds (diversified and wind down in equity as approach retirement). They attempt to take the decision making off the individual. I preach these daily. It’s the industry’s attempt to DB-ize the 401(k). But even with all that the 401(k) is still a limited creature for retirement savings.
Yes that’s also a big problem. Again it gets back to the government viewing it as a tax expenditure. There’s really no reason why an employer sponsored 401(k) should allow greater tax-advantages savings than an IRA.
Actually a 401(k) doesn’t need to cost an employer a penny. Matching contributions are not mandatory and the costs for record keeping, legal, etc can be expensed against the plan (the employees). The primary reasons an employer doesn’t offer a plan is either (a) too lazy, or (b) doesn’t want the responsibility (but fiduciary respinsibilities these days are easy to take care of or can be outsourced and not become an employer cost).
Oh I don’t think the government should require any employer offer a plan. Rather it’s a change in our societal structure where employers no longer look to assist their employees reach their retirement. At least not in the most meaningful way possible. I’ll preach pro-DB plans until I’m blue in the face and occasionally I find an employer who will listen. But they aren’t great for the bottom line for companies and thus I doubt we’ll see a comeback.
