The Money with Katie Show Rich Girl Roundup: Is It True That 401(K)s Will Be Dead in 10 Years?
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Mar 25, 2024 Discussion on the potential disappearance of 401(k) plans in the next decade, exploring tax implications and retirement savings strategy. Delving into the intricate relationship between 401(k) plans and taxes, including a riveting tale of unreported gambling profits and trust in tax preparation.
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Article Targets Tax Treatment, Not Balances
- Bloomberg's headline framed 401(k) doom as tax-treatment elimination rather than disappearing account balances.
- The debate hinges on whether traditional pre-tax benefits remain worthwhile versus Roth-style taxation shifts.
Policy Shift Seen As Easier Than Tax Hikes
- Eliminating 401(k) tax advantages looks politically easier than raising taxes directly, per the article.
- Katie and Henah note the government loses about $185 billion yearly to these deferrals, roughly 1% of GDP.
High Earners Capture Most 401(k) Benefit
- Tax deferrals disproportionately benefit high earners because savings scale with marginal tax rates.
- Katie questions whether much of the $185 billion favors upper-income households over true middle class.