Will 401Ks Be Taxed?

Aug 28, 2017

The Trump Administration says that it wants tax cuts. But it appears it is settling for tax shifting. Administration officials feel compelled to find ways to pay for “cutting both the individual and corporate tax rates.” The easiest way to pay for tax cuts is to slash government spending. But politicians hate spending cuts. Some ideas being discussed would be capping the mortgage interest deduction, ending the deduction of state and local taxes, ending the ability of businesses to deduct interest, and phasing out immediate deductibility of new equipment for small businesses. “One idea quietly being discussed would be taxing the money that workers place into their 401(k) savings plans up front.” Officials speculate that billions of dollars could be raised. When you have a government approved retirement plan, you are in partnership with the government. Politicians set the rules and can change the rules. What may not be taxable today, may be taxable tomorrow if politicians need the money.