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Should I continue to max out my 401K? I'm worried about it being raided one day
Posted on 8/24/14 at 11:59 am
Posted on 8/24/14 at 11:59 am
I am pretty convinced that at some point in my career (I'm 33) the feds (or more specifically some Elizabeth Warren type progressive Democrat President) will decide to lead a charge that anybody with over (let's say) $5 million in their 401k has been overly privileged and should be taxed on this after all (or have it outright raided).
It just seems that with soaring deficits, debt, etc. it's the most logical (and politically acceptable) thing to do - to raid or tax the tax free retirement funds of multi-millionaires who have presumably (from the amount in their 401k) had long and lucrative careers (and just to clarify, I'm obviously not a multimillionaire right now - not even close. But if I continued to contribute over 10% for the rest of my career I'd have around $5MM assuming continued 8% growth YOY).
I assume that many will say I'm being overly concerned about this, but I've already bought an investment apartment to rent out and cut my contribution from 12% to 7% as an indirect result. I'd like to do this again every 2 years just to have a more diversified portfolio that isn't too 401k-heavy.
It just seems that with soaring deficits, debt, etc. it's the most logical (and politically acceptable) thing to do - to raid or tax the tax free retirement funds of multi-millionaires who have presumably (from the amount in their 401k) had long and lucrative careers (and just to clarify, I'm obviously not a multimillionaire right now - not even close. But if I continued to contribute over 10% for the rest of my career I'd have around $5MM assuming continued 8% growth YOY).
I assume that many will say I'm being overly concerned about this, but I've already bought an investment apartment to rent out and cut my contribution from 12% to 7% as an indirect result. I'd like to do this again every 2 years just to have a more diversified portfolio that isn't too 401k-heavy.
This post was edited on 8/24/14 at 12:06 pm
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Posted on 8/24/14 at 12:28 pm to SirWinston
If that happens, I'm moving to Costa Rica.
I think you're being overly concerned. But I don't trust ultra liberal politicians, either.
I think you're being overly concerned. But I don't trust ultra liberal politicians, either.
Posted on 8/24/14 at 12:33 pm to SirWinston
Dude, think this through.
If the government can get your 401k, they can get your rental property. They can seize it, or get the money directly from the tenants. They can get the income from that via taxes, or pull it out of your bank account. If you think you are going to hide it in your mattress, then they will come through the front door and take it.
So unless you think you're going to shoot all those MFers I suggest you max out your 401k. In any event, your money is probably not going to be worth all that much if/when they start doing that sort of thing, because we'd be in such a economic shitter we'd probably be better off burning it for warmth.
Its like the people who buy gold thinking the economy is going to collapse, but don't have any food or weapons. I say, "OK dude, I'm gonna keep getting my yearly return, because we're both fricked either way if that worst case scenario plays out, and if it doesn't, your retirement is going to suck, if you get one."
If the government can get your 401k, they can get your rental property. They can seize it, or get the money directly from the tenants. They can get the income from that via taxes, or pull it out of your bank account. If you think you are going to hide it in your mattress, then they will come through the front door and take it.
So unless you think you're going to shoot all those MFers I suggest you max out your 401k. In any event, your money is probably not going to be worth all that much if/when they start doing that sort of thing, because we'd be in such a economic shitter we'd probably be better off burning it for warmth.
Its like the people who buy gold thinking the economy is going to collapse, but don't have any food or weapons. I say, "OK dude, I'm gonna keep getting my yearly return, because we're both fricked either way if that worst case scenario plays out, and if it doesn't, your retirement is going to suck, if you get one."
This post was edited on 8/24/14 at 12:37 pm
Posted on 8/24/14 at 3:26 pm to SirWinston
You should take this to the poli board where your paranoia is shared.
Posted on 8/24/14 at 3:27 pm to SirWinston
I don't think there's a chance they will 'raid' your 501k, but there is a very good chance they will
* means test social security, as they do now to an extent by taxing it if your income is over some level...I think in the future you'll just not get social security if you have some level of income
* raise tax rates on higher incomes
either way though, I still think you're still better off maxing out your contributions and getting the tax deduction...though the investment in rental real estate will probably do better for you over the long term, even if the income is taxed as you have depreciation to shelter for some time
* means test social security, as they do now to an extent by taxing it if your income is over some level...I think in the future you'll just not get social security if you have some level of income
* raise tax rates on higher incomes
either way though, I still think you're still better off maxing out your contributions and getting the tax deduction...though the investment in rental real estate will probably do better for you over the long term, even if the income is taxed as you have depreciation to shelter for some time
Posted on 8/25/14 at 8:29 am to SirWinston
THen diversify to a Roth or something that is done with money already taxed.
IMO, if they ever do something like you described, it will be on vehicles like 401's that weren't made with taxed money....
I think you might be over thinking, I think they would change the law first and grandfather plans like yours in to the old law.
IMO, if they ever do something like you described, it will be on vehicles like 401's that weren't made with taxed money....
I think you might be over thinking, I think they would change the law first and grandfather plans like yours in to the old law.
Posted on 8/25/14 at 9:06 am to SirWinston
I hate politicians as much as anyone on this board, but they will never get their hands on your money unless you let them through the electoral process. I know the direction you're going, I just don't see the general public putting up with that type of shite - especially the key donor demographic in the Democratic party: Wall Street.
Now that we have that out of the way, I guess it depends on your alternative investment options. Real Estate will depend on the location and the stability of the local economy, amongst other things.....
Now that we have that out of the way, I guess it depends on your alternative investment options. Real Estate will depend on the location and the stability of the local economy, amongst other things.....
Posted on 8/25/14 at 9:30 am to SirWinston
I don't think they'll raid it so much as I think they'll impose restrictions on it. So consider it an opportunity that you should exploit while you still can.
401k's are gaining in popularity, and with that comes an increased proportion of the population vested in that option, and that brings political support as time goes on.
401k's are gaining in popularity, and with that comes an increased proportion of the population vested in that option, and that brings political support as time goes on.
This post was edited on 8/25/14 at 9:33 am
Posted on 8/25/14 at 9:42 am to SirWinston
Coming from an expert here, if the government ever raids your 401k or bank accounts, the balance in said accounts will no longer matter because the United States as a nation will no longer exist. I have no doubt taxes will rise in the future, but the government will never "raid" private accounts like a common thief the way you are thinking that they might.
This post was edited on 8/25/14 at 9:44 am
Posted on 8/25/14 at 4:03 pm to SirWinston
No, but for different reasons. You should definitely contribute up to your employer's match. But beyond that, open up a brokerage account. Your 401k options are very limited for what funds you can invest in. You want diversity, and you can invest in lots of other things.
Posted on 8/26/14 at 8:46 pm to SirWinston
This kind of idiotic thinking keeps people poor. It's the thinking that had people gifting everything in 2012 because they thought Obama would let the estate tax exemption go back to 1m. But stupid people are what's need for arbitrage situations. Carry on.
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