Biden's 401(k) Plan Is Vague, but Worth Paying Attention to
Joe Biden’s tax plan would overhaul retirement plan tax benefits.
Policymakers have had little luck in reforming the tax structure for 401(k) defined contribution plans (as well as their siblings 403(b) and 457 plans) for decades. It’s been easy to add benefits—new ways to save such as the SIMPLE IRA, higher contribution limits, and a “Roth” option to use post-tax money that can grow and be withdrawn tax-free—but no one has had much luck reforming the basics of the system. Biden is going to try if he wins the upcoming presidential election, and that has important implications for retirement savers.
For a quick review, at least for the retirement plan participant, the tax benefits for saving in a traditional 401(k) or other tax-privileged retirement plan are inversely related to income. That is because these contributions reduce a wage-earner's taxable income, and the United States has a progressive tax system. Under a progressive tax system, tax rates increase as workers earn more money. The highest tax rate a person pays is called their “marginal rate.” Since higher-income people have higher marginal tax rates, they benefit the most when they reduce their taxable income by contributing to a retirement plan.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.