President Biden’s efforts to tax the rich may end up targeting your retirement account.
Savers see their 401 (k) balances hit a new all-time high. Fidelity Investments reports a 24% jump in 401 (k) balances compared to the same period last year. However, that could all change if a proposal from the Biden administration passes.
The president wants remove tax deductions for 401 (k) contributions and replace them with a tax credit. KTRH financial advisor and host Ric Edelman says the idea is to help low-income Americans who want to save money. However, he has serious doubts.
“Perhaps the new proposal could go a little too far. This means that it doesn’t just help reduce income at the expense of wealthy Americans. The middle class is also trapped in this ”, Edelman noted.
There is another potential problem in the proposal. If states do not comply with this proposal, taxpayers could be taxed twice: once when they contribute, and once when they opt out.
“In an effort to try to create a better balance between rich and poor, lawmakers can sometimes forget about the middle class, which is a huge segment of the population,” Edelman explained.
No Senate Republican has expressed support for the plan.