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What is the philosophy behind placing limits on how much high earners can save?
Posted on 9/17/18 at 4:11 pm
Posted on 9/17/18 at 4:11 pm
I am specifically talking about 401k and Roth limits related to income. Is the idea that high income people will invest in other things like real estate, or just spend the money they can’t save so it goes into the economy?
9
Posted on 9/17/18 at 4:14 pm to weagle99
Govt gonna get theirs.
Posted on 9/17/18 at 4:27 pm to weagle99
It drives me crazy that IRA contribution limits aren't the same as 401k limits.
Posted on 9/17/18 at 4:45 pm to weagle99
There's no limit on how much high earners can save. There are, however, restrictions and limits on tax treatment.
Posted on 9/17/18 at 4:48 pm to MusclesofBrussels
After $120k your max Roth direct contribution gets reduced until it is eventually zero, which is one of the things that prompted this thread.
Although I see what you are saying
Although I see what you are saying
This post was edited on 9/17/18 at 4:50 pm
Posted on 9/17/18 at 5:26 pm to weagle99
HI folks also can realistically max those accounts as well as 529s and HSAs, which let's be honest are for high income earners. While I'd appreciate even more places to save tax it's not exactly a total travesty (separate and apart from the rates themselves and related government waste).
This post was edited on 9/17/18 at 5:27 pm
Posted on 9/17/18 at 5:33 pm to weagle99
quote:
I am specifically talking about 401k and Roth limits related to income. Is the idea that high income people will invest in other things like real estate, or just spend the money they can’t save so it goes into the economy?
I thought the 401k limit was for matching funds?
I feel like the ROTH IRA limit is criminally low. $199k isn't that much if you live in a big city, and easily attainable by two professionals.
Posted on 9/17/18 at 5:38 pm to weagle99
quote:
weagle99
Don't try to let logic or reason explain the political.
This post was edited on 9/18/18 at 11:04 am
Posted on 9/17/18 at 5:42 pm to brian_wilson
quote:
$199k isn't that much if you live in a big city, and easily attainable by two professionals.
Things certainly get messy when you consider taxation with local COL.
However, my initial reaction is that's a local tax/policy issue and not something the Feds should be trying to fiddle with from a national perspective
Posted on 9/17/18 at 6:03 pm to weagle99
The tax break is an incentive to save and not have the government have to take care of you in old age. At some point you make/save more than is needed to hurdle the threshold for govt assistance.
Also rich people paying more taxes looks good for politicians.
Also rich people paying more taxes looks good for politicians.
Posted on 9/18/18 at 7:43 am to weagle99
Are 401k limits tied to income? I thought the 18.5k and 55k limits were across the board?
Posted on 9/18/18 at 8:12 am to weagle99
quote:
What is the philosophy behind placing limits on how much high earners can save?
quote:
Is the idea that high income people will invest in other things like real estate, or just spend the money they can’t save so it goes into the economy?
Do you think you have to put money in a IRA or 401k to save money?
At a certain point, the government has to tax something. If you could put an unlimited amount in a Roth, you could theoretically never pay tax on any of your investments.
Posted on 9/18/18 at 8:46 am to Weagle25
quote:
Do you think you have to put money in a IRA or 401k to save money
I should have said tax advantaged savings I guess. Although I don’t understand the phase out for Roth considering it is after tax money.
quote:
If you could put an unlimited amount in a Roth
$5500 isn’t unlimited
This post was edited on 9/18/18 at 9:59 am
Posted on 9/18/18 at 8:47 am to hottub
quote:
Are 401k limits tied to income?
Yes. HCE’s are limited on pretax contributions.
Posted on 9/18/18 at 10:41 am to weagle99
quote:
I should have said tax advantaged savings I guess. Although I don’t understand the phase out for Roth considering it is after tax money.
Same reasoning as the limits on other accounts, the growth of the Roth is going to be tax free, the government wants some limit on how much a a tax break you are getting.
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