Episode 104: The Real Tax Implications of Biden's 401(k) Proposal

Joe Biden is coming for your 401(k) and it’s actually worse than David portrayed it in previous episodes of the podcast. Under Joe Biden’s tax proposal he is going to equalize the tax benefits of retirement plans. David breaks down exactly what this means for people in different tax brackets and what the implications of this plan are. In order for Joe Biden’s plan to be tax neutral the rate at which you receive a tax credit is 26%. This essentially means that anyone in a tax bracket under 26% is getting a great deal and anyone in a bracket above the 26% tax bracket is getting a terrible deal. Let’s say you’re in a 39.6% tax bracket and wanted to contribute $20,000 to your traditional 401(k). With the 26% benchmark you would receive a $5200 tax credit and have to pay $2720 in income tax on that contribution. But wait, there’s more. At some point you are going to have to take those dollars out because they haven’t taxed yet. Not only did you pay 13.6% to put the money in, if you’re still...