President Biden’s efforts to tax the rich may end up targeting your retirement account.
Savers are seeing their 401(k) balances hit a new all-time high. Fidelity Investments reports a 24 percent jump in 401(k) balances compared to this time last year. However, all that could change if a proposal by the Biden administration passes.
The president wants to eliminate tax deductions for 401(k) contributions and replace them with a tax credit. Financial advisor and KTRH host Ric Edelman says the idea is to help lower-income Americans who want to put money away. However, he has some serious doubts.
“The new proposal perhaps could go a little overboard. Meaning, it’s not just helping lower income at the expense of rich Americans. The middle class is getting caught up in this as well,” Edelman said.
There’s another potential problem in the proposal. If states don't comply with this proposal, taxpayers could be taxed twice: once when they contribute, and once when they withdraw.
“In an effort to try to create a better balance between rich and poor, the lawmakers might sometimes be forgetting about the middle class, which is a huge segment of the population,” Edelman explained.
No Senate Republicans have voiced their support for the plan.