Roger, this information about what Congressional Democrats want to do about 401Ks is news to me. May I ask what your sources are?
There are probably economic complexities here that I don't comprehend, but it really doesn't make sense to me that any party would want to do that. AFAIK, BOTH parties agree that Social Security is a mess right now, and that when all the Baby Boomers retire there won't be enough money coming in to fund current payments. So people are told NOT to count on the government and Social Security. If the pre-tax contribution advantage is removed, most people will probably make smaller contributions to their own accounts, which makes them even less prepared.
If this is just a tax grab by the Democrats, as you might be arguing, I would think that there are better ways to go about it. Canada faced a major fiscal crisis with an ever-mounting budget deficit in the 1990s, but as far as I know, they never made any similar threats about RRSPs, which serve a similar role to the 401K/403B plans. It certainly would have brought in some easy revenue for the government, in a climate that is used to higher taxation and bigger government. I would have thought they would be more likely to attempt it than any US political party.
Truthfully, no matter how far left one feels that the Democrats are leaning, I do find it hard to believe that they would contemplate such a move with the rising senior population.
Kathy
