Death of 401ks...Again and Again.

[goldtpa]

Why is it that every President since Bush wants to get rid of 401ks?

First it was Bush with his LSA, RSA, and ERSA Plan. Then Obama and his Retirement Annuities.

Now its Trump who wants tax S Corporations, REITs, RICs and small business limited liability corporations at a 15% tax. However retirement plan distributions would be taxed at 35%.

 

[CuseFan]

Politics is all about what you do now to get re-elected, not what you do for the long term health and welfare of the nation. Killing small business retirement plans to generate current revenue at the expense of both future revenue - because it's a tax deferral - and the cost of increased future entitlements - because more people will retire into poverty - is short-sighted. Same with negotiating with unions on governmental plans, particularly post-retirement health, as politicians secure lower current wage increases for immediate tax savings but give away unsustainable future benefits and let future generations deal with it. These "kick the can down the road" policies are setting this country up for a huge generation and class warfare among four quadrants of citizens: wealthy aged, poor aged, self-sufficient youth and un/under-employed youth. Forget political term limits - make everything an extended single term so there are no re-elections, and mandate there must be a "term off" before running for a different office. Then we might get true public servants with the country's best interests in mind, not career politicians working only to stay in power. Unfortunately, "House of Cards" is probably very close to true politics in this country. 

 

[MoJo]

36 minutes ago, CuseFan said:

Forget political term limits - make everything an extended single term so there are no re-elections, and mandate there must be a "term off" before running for a different office. Then we might get true public servants with the country's best interests in mind, not career politicians working only to stay in power. Unfortunately, "House of Cards" is probably very close to true politics in this country. 

 

While at first blush, your "idea" sounds compelling - but I question: "where does the expertise come from if you limit elected officials to one term?  How does one develop relationship that allow for compromise that actually get's things done, as opposed to being able to "stand firm" ideologically when you have no opportunity to be re-elected?"

Getting back to the OP - the problem is budgets are scored on a 10 year time frame - even though much of government is funded through a variety of debt instruments extending out to 30 years (and even beyond).

Time to reform the budget process and metrics to look out for a "lifetime" and determine the longer term effects of policy.  The problem is, when you measure to a 10 year metric, you adopt a mindset of "the next group will fix it, so it really doesn't matter now."

[ESOP Guy]

it would help if the government was forced to accrual accounting.   That would help measure the long term costs.  It would also get rid of SOME of the accounting games. 

The mandatory 20% withholding on distributions is a classic example.  it was my understanding that law was passed to make a budget back in the day "work".  It did this because it meant some part of the taxes on retirement distributions got paid in the current year instead of the following tax season.  But in the aggregate all it did was move future revenue into the current year.  It never increased total revenue.  It also was a one time "fix" as after then the move from the next year was offset by the loss of the previously moved revenue. 

A business working on GAAP accounting could never goose its income statement one time by increasing its pre-paid revenue. 

[CuseFan]

I know "one and done" politics won't work because the first half of the term is learning and the second half is arguing/jockeying for your agenda, and so it's the third half when things would actually get done - and I work with enough actuaries to know there isn't a third half. 10-year scoring makes sense for a tax expenditure but, as we all in the retirement industry know, not for a tax deferral. And where will all the tax revenue come from in 40-50 years when the majority of retirement distributions are tax free Roth dollars? Who cares, we'll let the next generation of post-millennials deal with that. Sorry, current politics has me in a cynical ranting mood!

[MoJo]

43 minutes ago, CuseFan said:

... current politics has me in a cynical ranting mood!

Uh, a "cynical ranting mood" seems to be the new normal.

You are in good company.

[CuseFan]

Yeah, and I'm the optimist in the family!

[Tom Poje]

The title of this post, best summed up ...

In 1897 when a journalist was sent to inquire after Twain's health, thinking he was near death; in fact it was his cousin who was very ill. Though (contrary to popular belief) no obituary was published, Twain recounted the event in the New York Journal of 2 June 1897, including his famous words "The report of my death was an exaggeration" (which is usually misquoted, e.g. as "The rumors of my death have been greatly exaggerated", or "Reports of my death are greatly exaggerated").^[

[Belgarath]

Way off topic, (nothing whatsoever to do with retirement plans, in fact) but one of the funniest things I've ever read, which happens to be by Twain, can be found at the link below.

http://twain.lib.virginia.edu/projects/rissetto/offense.html