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The Phasing Out of a Well-Liked 401(k) Tax Break Explained | WSJ Your Money Briefing


Retirement savers who make “catch-up” contributions to their 401(k) account will lose an often-used tax deduction under new rules coming next year. WSJ’s Anne Tergesen joins host J.R. Whalen to discuss. 0:00 Catch-up contributions 1:05 Rule changes 1:36 Roth 401(k) vs. traditional 401(k) 3:02 Taxes on contributions 3:39 Financial planners’ advice 5:10 Estate planning Your Money Briefing WSJ's personal-finance podcast features the news that affects your money and what you do with it, breaking down complicated money questions from spending and saving to investing and taxes. For more episodes of WSJ's Your Money Briefing: #401k #Taxes #WSJ...(read more)



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Why This Popular 401(k) Tax Break Is Going Away: A Closer Look by WSJ Your Money Briefing The 401(k) tax break has long been a favorite among American workers, offering a means to save for retirement while enjoying the perks of tax-free growth on investments. However, recent discussions surrounding tax reform have brought to light the possibility of this beloved benefit going away. In this edition of WSJ Your Money Briefing, we delve deeper into the reasons behind this potential change. One of the main motivations behind the proposal to eliminate or limit the tax break is the need for additional revenue to fund other government initiatives. With the national debt continually on the rise, legislators are seeking ways to generate income and maintain a sustainable fiscal policy. The 401(k) tax break, previously seen as an untouchable pillar of retirement savings, is now being viewed as a potential source of revenue. Another argument against the 401(k) tax break is that it primarily benefits higher-income individuals who are already more financially secure. Critics argue that the tax advantage disproportionately favors the wealthy, exacerbating the wealth gap in society. They advocate for redirecting these tax savings towards initiatives that benefit a wider range of Americans, such as social programs or infrastructure investments. However, proponents of the 401(k) tax break argue that it serves an essential purpose - encouraging Americans to save for retirement. They highlight the fact that the tax advantage helps individuals grow their retirement savings faster by shielding them from taxes on contributions and investment gains. Additionally, the current system allows workers to defer paying taxes on their income until retirement when their tax bracket may potentially be lower. Critics of the proposed change also worry that removing or limiting the tax break would discourage people from saving for retirement, thus exacerbating the nation's existing retirement savings crisis. They argue that any modifications to the benefit should be aimed at enhancing it rather than completely dismantling it. These advocates believe that by making it more accessible to low-income workers and encouraging greater participation, the tax break can be a vital tool for addressing retirement insecurity among Americans. The potential elimination or reduction of the 401(k) tax break has ignited a spirited debate among lawmakers, financial experts, and the public. As the discussions continue, it is essential to consider the long-term implications of any changes made to this popular retirement savings benefit. In conclusion, the proposed changes to the 401(k) tax break are driven by the need for increased revenue and concerns about wealth inequality. While critics argue that the tax advantage largely benefits the wealthy, proponents underline its importance in promoting retirement savings. The decision to modify or remove the 401(k) tax break will have significant consequences, impacting the retirement plans of millions of Americans. As the discourse continues, it is important to strike a balance between generating revenue and ensuring accessible retirement savings options for all. https://inflationprotection.org/the-phasing-out-of-a-well-liked-401k-tax-break-explained-wsj-your-money-briefing/?feed_id=122620&_unique_id=64c6eee98b55f #Inflation #Retirement #GoldIRA #Wealth #Investing #401k #budget #CatchupContributions #employeeretirementsavings #financialadvice #financialeducation #investing #IRS #irslimit #money #moneymanagement #personalfinance #pfin #retirementplanning #retirementsavers #retirementsavings #ROTH401k #roth401kvstraditional401k #RothIRA #rulechanges #savings #taxbreak #taxbreaksforhomeowners #taxbreaksforretirees #taxdeductions #taxrulechanges #TaxRules #taxtreatment #taxes #wsj #yourmoneybriefing #TraditionalIRA #401k #budget #CatchupContributions #employeeretirementsavings #financialadvice #financialeducation #investing #IRS #irslimit #money #moneymanagement #personalfinance #pfin #retirementplanning #retirementsavers #retirementsavings #ROTH401k #roth401kvstraditional401k #RothIRA #rulechanges #savings #taxbreak #taxbreaksforhomeowners #taxbreaksforretirees #taxdeductions #taxrulechanges #TaxRules #taxtreatment #taxes #wsj #yourmoneybriefing

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