‘The 401(k) industry owns Congress’: How lawmakers quietly passed a $300 billion windfall to the wealthy
‘The 401(k) industry owns Congress’: How lawmakers quietly passed a $300 billion windfall to the wealthy
Greased by lobbying and campaign cash, tax breaks for retirement savings are one thing Congress agrees on. But they also blow out the deficit and add to income inequality.
Five months before Congress faced a near-catastrophic standoff over the debt ceiling, with Republicans demanding restrictions to food and Medicaid programs to rein in spending, a bill that raised the cost of private retirement savings accounts to $282 billion per year was quietly signed into law.
In this era of deeply divided politics, the 2022 bill known as Secure 2.0 was hailed as a bipartisan success — a victory for average Americans. It had sailed through the House by a whopping 414-5 vote. It followed four other major bills passed between 1996 and 2019 that dramatically expanded taxpayer savings – all equally lauded as bipartisan victories.
But that rare issue that brought a divided Washington together also increased wealth disparities and the federal deficit. And the victory was most strongly applauded by the burgeoning financial services industry, for whom tax-advantaged retirement savings has transformed a $7 trillion retirement market in 1995 to a $38.4 trillion behemoth in 2023.
Multiple times, people here on Lemmy have assumed I have a 401(k), as if it's something everyone has, and it always amuses me.
If you don't have access to one through work you qualify for a deduction and a credit if you contribute to an IRA.
Regular IRAs are riskier in the long run though. The extra cash from the tax breaks is nice, but they'll more than likely get taxed to hell when you finally are able to withdraw from it. ROTHs are more resilient to changes because the rich use them to avoid taxes, so it has protections from changes by the government.
The only reason I have one is because I can reasonably afford it, and I would be constantly harassed about not contributing to one if I didn't.
I am under no assumption it will even have any meaningful amount of money in it by the time I will be able to retire, assuming that will even be possible by the time I'm 65 (or whatever the retirement age is raised to in the meantime)
I would have.
Are you American?
Yes, that's why I'm poor.
When both parties agree on something it's almost always bad
They must look out for themselves and their owners first.
It is the same reason why a lot of Democrats fought to keep SALT deductions even though it mainly benefits the wealthy. It turns out that people who have 401(k)'s are more likely to vote.
401k was originally supposed to be a simple thing. It was supposed to be a way to avoid taxes on bonuses for more highly paid execs in the banking industry, but also regular employee bonuses too. They sold it to regular workers who might have gotten a few hundred dollar bonus by the employer “matching” the contribution to the 401k.
There was supposed to be a “three legged stool” for retirement. Social security, company defined benefit (pension), and then the 401k. Companies have done everything they can to get rid of traditional pensions, social security is under constant attack and the age you get it is pushed back, and the 401k is being looked at for taxes, being restricted by companies to high fee funds, and loses cash when transferring employers.
Retiring in the country is difficult at best, impossible for most, and constantly under attack for those who have a shot at it.
We've learned that a good chunk of leaders don't care for three legged stools. They know the best way to destroy them is to knock out one of the legs.
Look at the individual mandate in the ACA as a perfect example (the other two being pre-existing condition coverage and plan subsidies).
I do have to wonder if the absence of company defined pensions are a big part of the reason people job hop so much. A good pension was a good reason to lay down roots at a company. My current employer has a really good 403b match but the only thing really keeping me around is waiting to get fully vested.
I'd just like to say fuck VOYA 401ks for only allowing you to buy high expense ETFs and limiting self directed accounts to only half your account value in addition to a bullshit $100 yearly fee.