Wouldn't a $2400 limit on 401k kill Wall St

I wouldn't go so far as to say "kill". As always, it's complicated.

First off, there are large sectors of the financial industry that don't deal with 401(k) plans at all. For example, most hedge funds are by law only available to high net worth individuals who are "accredited investors" who presumably know what they are doing, at least more than Joe Public. So far as I'm aware, until very recently Goldman Sachs had no retail offerings and I don't think they're in 401's either. They deal mostly with other big Wall St. firms.

Second, this proposal (if it even happens) would have no impact on the capital that is already in 401(k)'s.

But it would impact new contributions, and so the influx of money into retail markets would slow down. But that money still exists, ultimately it gets distributed around in other ways, some of which lead right back to the various markets. And it's possible that Congress might decide to offer some sort of completely new way to save for retirement as some sort of compensation.

the biggest driver of 401k enrollment was the automatic enrollment. if you reduce this lots of people will just take the extra income and keep it.


which will slow down the find and reduce retail stock growth.

it is basically going big short term with little thought to long term consequences of reduced saving across the population.

couple that with lack of millenial investors and you have a generation or three without much of a savings plan.

quote:

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Tons of people automatically buy more stock with every pay check. The market would slow down immensely if this happens.

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LINK

Compared to total market volume those purchases are not very large. Total value of the U.S. stock market is about 25 trillion, 401K balances are about 4.1 trillion, and includes some investment in foreign markets. Most employees do not take full advantage of 401k plans, in 2015 the average balance of a 401K plane was $18,000, 40% of plans had a balance of less than $10,000 .

16% of a 25 trillion dollar market is yuge.

Weird comparison. 401ks are way more diverse than just stock.

I think I have 5!different asset type options I can choose from.