will everything be o(k) ?
If the proposed massive tax cuts are approved the government will need to find a solution to make up for the extreme loss in revenue. Where do they turn? Well, 2/3 of American workers have access to 401(k) plans, and just when we thought it was safe... it may be on the table.
republicans must solve the revenue gap tax cuts will create.
401(k)s are a sweet place for the government to look as half of Americans are investing in a 401(k) plan. There are THREE BIG QUESTIONS TO ADDRESS:
1. Are 401(k) changes going to happen?
Nobody knows if this is going to happen, but when it was even rumored to be a potential change it sparked OUTRAGE!
401(k) is pre-taxed money. The government is considering if they lower the amount you can contribute in PRE-TAX dollars i.e. money we lose revenue on this year.
Imagine the $18,000 contribution (Or $24,000 if you're over 65) limit being reduced to $2,400.
Legislators appear to be very unwilling to endorse the 401(k) changes. I think it is very unlikely that these proposed shifts to the 401(k) contribution limits will happen.
2. If change Does Happen - What Should you Do?
If you have a high salary that is taxed. This is significant.
If traditional 401(k) contributions are reduced it affects those who view it as a significant tax reductions.
You would need to consider after tax saving options like a ROTH IRA. sure, there will be tax changes, but it won't stop you for saving for retirement.
3. Am I rightly thinking about My 401(K)?
Your 401(k) is not your plan for retirement.
A 401(k) is a tool. It is a "part" of a good plan. Not the plan itself.
The government can not wreck your retirement by lowering 401(k) contributions, YOU can wreck your retirement by not saving any more. YOU can wreck your future by not having a strong plan that accounts for life changing.
If something changes to the 401(k), your plan for retirement should be strong enough to stay on track. your 401(k) is a piece of your overall plan and not the absolute towards retirement success.
Listen to The Full Show:
401(k)s can be complex. Listen in to understand exactly what we believe is coming down the pipeline, how your 401(k) is a "part" of your financial plan, and most importantly how to build a STRONG plan to reach your goals.
"The fact the President Trump tweeted about it Monday shows the level of outrage people feel."
"The government can not wreck your retirement by lowering 401(k) contributions, YOU can wreck your retirement by not saving any more. YOU can wreck your future by not having a strong plan that accounts for life changing."
"A lot of people I meet with have elevated 401(k)'s to be the end all. It is a great tool. Financial products are all tools. I love 401(k)'s, but we too often make them the most important thing."