Color of Money Live: What to make of GOP plans to cap your 401(k) contributions

Oct 26, 2017

Join Washington Post nationally syndicated personal finance columnist Michelle Singletary for an online discussion.

“Knowledge isn’t power. The right knowledge is power.”

Stay informed.

Sign up for Michelle Singletary’s free newsletters: "Your Retirement" on Mondays & "Personal Finance" on Thursdays http://wapo.st/personalfinance

Read & share Michelle Singletary’s Color of Money Column on Wednesdays and Sundays: http://wapo.st/michelle-singletary

Follow Michelle Singletary on Twitter (@SingletaryM) and Facebook www.facebook.com/MichelleSingletary

Read Michelle's recent columns.

Was reading about the GOP possible plan for cuts to contributions to 401(k). What do you think?

Anyway let's get started.

Hi, Just tried to Freeze my credit with Equifax and it won't let me. When I clicked to your link, it took me to a credit monitoring site with Equifax. It said monitoring is the only option. Then I found the link for the freeze, filled it out and it said we can't process your credit freeze request and then referred me to the other 2 credit bureaus. What do I do? Anyone else see Class action lawsuit coming?

So a few things. Equifax is offering free credit monitoring so that's what you saw. Within that service you can either freeze your file or lock it. Not both.

A freeze is what consumer advocates recommend because it's govern by state law. A lock is a feature the credit bureaus's created and so their rules. Both do the same thing however.

If you don't want to sign up for the Equifax free monitoring you can just freeze your file. But you have to go to each bureau to get a freeze on each of your credit files. 

It's not like ordering your credit reports from annualcreditreport.com where you go to one place. Or when you put a fraud alert on one and it covers the others. 

Each freeze has to be done separately. 

A few months ago, I traveled a toll road and upon going through the EZ Pass only lane, realized that I had inadvertently left my EZ Pass transponder at home. Even though I had traveled only a few exits, I had to pay the full turnpike toll at my exit - it was around $44. The turnpike worker said this happens all the time, and he gave me a receipt as well as a form for me to request a refund. He said it was probably a long shot to get a refund since this was my mistake, but "you never know." I submitted the refund form, owning up to my mistake and saying that I hoped they would have mercy on me because I certainly learned my lesson. The other day, I got a refund of $37+ in the mail! I know it's a small amount, but that made my day, and I realized it never hurts to ask.

I love, love this testimony. Because it never hurts to ask!

I did something similar. Ordered a movie. During the play got some buffering, etc. Got tired, decided to try watching it later. 

Well the time ran out to watch the movie and they wanted me to pay another fee.

Called Direct TV and explained what happen. 

In the category of  "it never hurts to ask" they refunded they gave me a credit for the movie so I can rent it again.

Now I could have tried earlier to watch the movie but with work, kids, etc. didn't work out. So kinda of my fault. 

But "it never hurts to ask." 

Can you provide some details regarding what's called a "Medicaid Annuity".

This is a strategy used so that one spouse isn't left broke while helping a partner qualify for medicaid. 

Nolo.com has a good explanation.  

Also caring.com has a good pro/con about getting an annuity to help qualify for medicaid. Search for "Are Medicaid annuities a scam." 

Here's the warning: "Assets held in Medicaid annuities aren't counted against the Medicaid asset limits, but these annuities are irrevocable and once [someone starts] receiving payments, [he or she] can't access the principal for any reason." 

I have lived well below my means for 20+ years. I live in a 550 square foot place and want to move into my 1,500 square foot house down the street that has been a rental for many years. The reasons are many with wanting to park in a garage (I live in a cold, snowy place), it needs to be fixed up due to filthy renters, and wanting a bit more space to accommodate guests. I have saved 55% of my take home salary for the last 12 years so I have cash for the upgrades and it will cost me about $7,000 more a year to live there and I anticipate a raise that will cover that amount this year. I feel a bit nervous to allow myself to spend that much more a year even though I believe I can easily afford it. Why is it so hard to spend the money when I have earned it?

I approve.

At least based on your comments. 

And why is it so hard to spend the money? 

You've rightly conditioned yourself to live below your means, to save, to run the numbers, to make sure you are making a sound financial decision. So naturally when you want your brain to turn to letting that money go you're afraid. 

But if you've run the numbers -- and it appears you have -- let it go. Make the decision. Even if later it turns out not to be the right decision, you make a good decision with the home and information you had at the time. 

I say do it. 

And it's not wrong to want more space if you can afford it. 

Just another example of the importance of a life happens fund. Took the car in for minor repairs on Monday, and it turned into a $1500 bill. Annoying, but only annoying, thanks to having the money right there in the life happens fund. It's amazing how much less stressful visiting the mechanic is when you have the money saved and ready to go!

Had a major car bill too on my 2006 van. But you are so right, having the funds makes you scream less at the cost!

Thanks for sharing.

And this is why you have to register your car and license plate with your EZ Pass account. You should have continued through the EZ Pass only exit lane. The system would have recorded no EZ Pass but then found your information via your license plate and charged you accordingly. This happens if you have your transponder and it's malfunctioning (i.e. dead battery).

Good point. We had an issue with our EZ Pass but you are right still went through the lane and just went online later to fix it. 

I signed up last week for your newsletters but I am interested in reading your earlier issues with links apparently on Equifax. Hot do we do it?

On the page for the chat is a link to all my columns and back newsletters. 

This proposal is so short-sighted, in so many ways: We already have a crisis of people not saving enough for retirement. To decrease the limits so sharply (down to $2400/year from 18,000 (under 50) or 24,000 (over 50)) makes no sense. There will be more people who will be at risk of having too little to retire, and ultimately, will need more assistance to live. And when (not if) that occurs, what will happen? Taxes will need to be raised, because we can't just let people starve or be homeless en masse. It just doesn't make sense (disclaimer: I am not a financial expert, just a veterinarian).


Reader Michelle's column: Trump and GOP tax reform could drastically and irreparably transform the 401(k) and other workplace retirement plans

Just veterinarian you are so right on the money!

Please read my newsletter. People we have to speak up about this. On twitter follow me and use the hashtag #dontraidmy401k to let your voice be heard. 

Do it now before anything firm gets on the table. 

Remember when President Obama tried to mess with 529 plans? People spoke up and that was taken off the table.

Yesterday, I saw a report that said the average annual contribution to a 401k is less than $2,400. This makes sense since if you're making $60,000/year, you can't contribution $18,000 to your 401k. Therefore, the $18,000 max is something only benefiting the "rich". Saying that, however, I'm sure there are middle class - and probably some with lower income - who are saving more than $2,400/year. While I max my 401k contribution to $18,000, I'm not against the tax-deductible limit of $2,400 as long as the law allows additional post-tax (Roth 401k) contributions up to $18,000 - so those with matching at work can still maximize their matching.

I hear you. But the average is just that. There are many people above and below that.

And only benefiting the rich?

If that you mean federal workers, teachers, secretaries, etc. Then okay. 

I'm writing about this for my Sunday column. There are hundreds of thousands of folks who contribute more than the $2,400 and they are middle income, regular folk who have in comes cases become millionaires by contributing much more than $2,400 a year over a 20 or 30 year career. 

If we help people save now, we won't have to "save" them later. 

Don't balance this tax reform on the backs of regular folks.

Both my wife and I make a good salary, but we don't contribute all the way to the cap (we each put about $10k/year). One question though, does the cap include any company match? If so, we're definitely over the limit.

The cap only includes what you put in. 

Except I think this administration would have no problem doing exactly that if it meant the rich folks get their tax breaks.

I believe that too. We have a gov't now largely run by millionaires and billionaires who don't know what it's like to miss a meal or struggle financially. They believe they got their wealth on their own. 

You can enter your vehicle information (make, model, license plate number) on the EZ Pass website. We share one EZ Pass in our family, and I entered all three cars' information. One time when I drove through a toll gate without the EZ Pass, the agency looked up my tag number and charged the EZ Pass, they never sent me a violation notice. So it's worth taking a few minutes to enter your vehicle info.

Love the tips. Thanks.

Well, I like all the folks who read this chat so I won't get salty. That said, years ago I did decrease the contributions I made into my 401k so I could fund a Roth IRA. Because you never know what is going to happen to tax rates before you retire.

Smart. 

But keep in mind the limit for a Roth is well below the max for 401 (k). If you can do both, sure do both. But I live the workplace plan because you can contribute so much more. 

And to your point about income taxes. Yup, you never know. 

For example, it's possible rates could go down in the future so that you aren't taxed at the right today making the 401 k a slam dunk. 

Or they could be higher. 

We never know.

I say save in whatever works for you. But save. 

What are your thoughts about Congress considering substantially reducing the tax free amount that you may contribute to your 401(k), 403(b), TSP etc. to $2,400 possibly for individuals?

Ah, you probably wrote this before reading my newsletter because I tell it like it is: It stinks!

What a terrible idea to cap the tax benefit at 2400.00 or 2500.00. If anything they should be increasing it because so many companies don't offer retirement anymore. This is going to be the lifeblood for many in their retirement. I fail to see any kind of justification that would encourage more savings by applying a cap. But what do you think Michelle. If you were Queen of the World and ready to make financial lives easier for the good citizens of the United States, what would you do to create incentives for more retirement savings?

I agree this is a bad, bad, bad idea. It's already hard to get people to save. 

Queen for the day

Fix healthcare. Make it so people don't go broke trying to get medical attention. Because this is the key to making what money you have last in retirement when you are more likely to need medical help. 

I got a letter from my landlord a few days ago telling me that I was $72.18 behind on my rent. Now, we pay the landlord for our share of the utilities and the landlord sends it on to the utility company. $72.18 was clearly a utility bill since my rent is a heck of a lot more than that, and I pay the two chunks with different checks. Because my records are all there, I was quickly able to figure out which month of utilities it was and look up the check on my bank account and see that I sent it, it arrived in a reasonable time, and was cashed by my landlord. So, when the supervisor called back and said, she looked into it and my check for that month didn't include the utilities, I was able to give her the exact check number and confirm it had a note on it attributing it to my apartment. She finally tracked it down and saw that her employee assigned my check to my neighbor's account. I also confirmed that they didn't report it to any credit agency. But having your records in order is important.

You are so right. It's why my office floor is a mess -- AGAIN. I can't throw any records away.

But trying to scan more things. 

So I was just looking at my TSP Account (not a millionaire yet, but still saving! :p ), and I was struck by the amount of Agency Matching contributions the feds make on my behalf, the 5% matching. The default is to put this money in the traditional TSP, even if you elect to put *your* contributions (the $18k this year) in Roth. I've already exceeded $2,400 in agency matching this year, and the year is not even over yet. I don't think the greedy you-know-whats in Congress have thought about this, but what would that $2,400 limit do to these agency matching contributions? It does sound like they would be Roth contributions. Or perhaps they intend to just screw us further and just end the agency match... Actually I'm surprised the b*(&$%S have not yet proposed this.

The caps only apply to what you put in. 

And normally I would say watch your language but in the case of this proposal or any to mess with people trying to save for their retirement some cussing is in order $%&^#&())*@

if they changed the rule so only $2400 could be put into a regular 401(k) account and the rest had to go into a Roth style account. I'd even still have some wiggle room left over. But I am well aware I am the exception, not the rule. It would add nearly $700 a month to my federal/state/local taxes. That is a tax increase by anyone's books. I think it will very unpopular and primarily impact upper middle class taxpayers who are much more likely to vote than the less wealthy (who may not even have access to a 401(k) at work). It is also a form of bait and switch-"Well, you don't have the security of a pension anymore, but now that you have to live with investment risk and living too long risk, and bad actor investment advisor risk, etc. at least you get some tax advantage out of it." They are trying to take that away. I generally accept that I am fortunate and don't really need a tax break, but this will make me angry. I shouldn't have to pay for Donald Trump's kids to get to inherit his golf courses for free.

Yup, this is change to help give a bigger tax break to businesses and the wealthy. 

On our backs!

This happened to me several years ago. Over a Thanksgiving visit with family, my wife and I took a bunch of nieces/nephews (8-15 age range) to see the new King Kong movie. About 20 minutes in, we realized that it was way too scary and violent for the younger kids, and decided to leave. On a whim, my wife asked the theater if we can get a refund (long shot!), but we got one. I didn't even know movie theaters give refunds. For all the tickets, it was well over $100.

WOW! You win!!!

Okay folks this gives me an idea. I'd love to do a whole column on "it never hurts to ask." 

Any more stories?

And credit to the person who started this all - EZ pass person (thanks!)

My wife and I are both retired. Able to retire because of 401k plans House paid off, no loans and we paid for the chidren's educations with 529 plans. The 401k plans and then 529 plans will get cut because they do not benefit the truly wealthy. An article on CNBC https://www.cnbc.com/2017/10/25/billionaires-get-1-trillion-richer-as-part-of-super-rich-super-cycle.html says there are now 1542 billionaires worldwide. They don't need them, since they are worth more than the GDP of the entire EU combined. The Supreme Court has said money is free speech and billionaires can yell louder than us. Why would a congressmen call 100 people can get $1000 from each when they can call one billionaire and get a million or more? Who would they want to make happy? Don't get me wrong I have no problems with getting rich, my wife and I are millionaires. As a retired teacher I would never have let the loudest student in the class keep the rest of my class from learning. Letting billionaires spend as much as they want on campaigns is what has brought us to this point of cutting savings vehicles for all.

Amen!

The first I heard of it was Trump's tweet saying it wasn't going to happen. I didn't even think that was on the table. I guess the Republicans are trying to push Roths so they have near-term tax revenue instead of for the long term. But it seems so much like screwing the little guy. Still the whole thing is a handwave at this moment, we don't even have the outline of a plan, just a slew of bullet points that all benefit the wealthy. So I don't have much faith that the rest of us will fare well.

It is like screwing the little guy.

And we should not be complacent.

This could happen, which is why we MUST speak up. Take to Twitter #dontraidmy401k. Take to Facebook. Call your congress person. We can't afford to wait and see what happens.

Should you stop contributing to your 401K temporarily to go all in on eliminating credit card debt?

If you get a company match, put in at least enough to get the match because that's free money. 

Once you hit the match, I sometimes do tell folks to stop retirement contributions to dig out of deep debt. 

Ideally, I'd like you to continue saving for retirement and cut expenses to pay off debt. But if funds are super tight and you have cut as much as you can and still not making headway on the debt, you can pull back on retirement savings. 

BUT you must, must jump back as soon as the debt is gone. 

Hey, The news that they may mess with our 401Ks is really crazy. Why would they want to do that? Since it's pre-tax contributions, we are going to pay taxes when we pull the money out, but what is the deal? They want to tax everyone now? Why would they want to do this to so many people? I cannot believe it and think they are out of their minds. Would you do anything besides keep maxing these out?

They are trying to find ways to fund the breaks they want to give to businesses. On the theory that the businesses will turn about and pay people more. 

Trickle down economics they call it.

I call it $^&**#&^% 

Sorry that Baltimore cussing spirit again. 

ARE THEY CRAZY???? Already there is a lot of concern that we aren't saving enough for retirement. And now the GOP wants to make it harder? What were they smoking when they came up with this idea?

The weed they made legal!

The Republicans feel the 401K is a tax break for the middle class, but eventually taxes are going to have to be paid on that money when its withdrawn. And it can be a pretty significant percentage if you have worked hard to build up the money in your plan and you are getting social security. With a rapidly aging workforce, the Repubs are really going to appreciate those taxes when less people are working. Why don't they every take that into consideration?

Because they are idiots who get money to campaign from people that are not us!

My wife and I are saving up to buy a new car either summer 2018 or 2019 and were debating how much money to put into the old car that the new one would be replacing. In the next year the old car will need a new windshield and new tires, which is leading my wife to want to get the new car next year. While I consider those items as regular maintenance and buying us a year of no payments. Her argument is the new car will cost the same no matter what, so why even bother putting any money into the old car. We are probably looking at financing half the cost of the car next summer, vs a much smaller amount the year after. I see her point and we are sort of at an impasse on this discussion and I was looking for what you thought about this

Can I please break the tie?

Tell I said you are right. Wait. In fact, I would say wait until you have saved all the money for the new car.

Save by not having to pay auto interest. And save by considering a used car, which means you could get another car sooner with your saved money

Any idea of how someone with 2-3 years out from a wedding should effectively save for it? I'm in a committed relationship, discussing and praying together on an engagement happening in the next year once S.O.'s student loans are in a more manageable place. It feels silly to make a "weddings savings account" when I don't have an engagement to speak of yet, but I don't want to be blindsided and unprepared when this likely happens in my near future. Simple savings account? Very conservative funds in a brokerage account just to hope to beat interest rates?

I'm not your mama but if I were I would say your focus right now should be paying off ALL your student loans and any other consumer debt (car, credit cards) before you even think about saving for a wedding. 

A more manageable place is no student loans. If you want to get married before the loans are paid off I'm thinking

Simple ceremony. Simple reception: Mama's house. Kool-aid, grocery store cake. It's one day and a party. 

Once you get out of debt, sure save the money in a deposit account if you are getting married within 5 years of paying off your debt. Why? You shouldn't invest money you need in the short term. 

Hi Michelle! Thanks for your great advice. Wanted to warn other readers about getting your FREE ANNUAL CREDIT REPORT. Go to the correct site, annualcreditreport.com, NOT annualreport.com, like I did accidentally. Annualreport.com appears to be a fine service, but one that ropes you into a subscription for monthly monitoring. But, I was glad to see my credit reports were all fine and dandy, with nothing unsuspicious.

Thanks for the warning. Yes folks annualcreditreport.com 

I recently got a check in the mail from some settlement I didn't know I was part of. The check was the top part of the page, and a 1099 for 2017 was attached. Is this legit? I'd never worked for or done work with the company that was part of the settlement.

I suspect it is legit. You can always check with IRS. 

Michelle, Did you also note that the proposed reduction to the 401K plan will be a pay cut to most Americans, since the majority of companies have a % matching. If the contribution limit will be $2400 that would also mean a lower % for the matching which would be a reduction in compensation.

Good point.

But the proposal does nothing to reduce the deduction for the more generous retirement plans that rich people can access, such as a SEP, or even a defined benefit plan. I'm old enough that at my first job they had one of those, but when I left after five years I walked away with $500.

Just shaking my head!

I keep reading articles that say the average account is very small (around $100K?) or that the average size of an account of people in their 60s is too little to retire on($170K?). But don't people have multiple accounts? I have my TSP. But also a regular rollover IRA and a Roth IRA. Plus other investments. And various bank accounts. And accruing what will end up being a very small pension. So is there any research at all (obviously much harder to do) on what people actually have saved for retirement? Not just the size of one account or other. What the real situation is out there.

There are reports that take into account such things. But honestly, many people don't have as much as you do. 

 

I haven't looked at it yet, and do agree that we should encourage people to save more not less, but no one is stopping anyone from saving outside of a retirement account. (i read in China they have nothing for retirement from the govt, and people save 50% of their incomes for it. in such a poor country).

Here's the thing. Having a workplace plan helps people save because they don't have to go out on their own to do it. 

Yes, they can go out on their own but they don't. And when you do, you can't save as much as you can in a 401k. 

 

For those of us getting a somewhat later start on retirement (graduate school, poorly paid part-time starter jobs, etc.), the tax-exempt contributions are an absolute GODSEND. Once I got a full time job, I was already behind so I had to save even more to get my balance up to retirement level. I make more - but not that much more - than the other poster's named number of $60,000 - and I can tell you, being able to have my contributed amount be exempt allowed me to contribute 25% more than I could have. That has made all the difference, and I will be able to retire.

Your story is exactly why they shouldn't mess with this.

a 3-legged stool for retirement: workplace pensions (now gone), personal savings (401K under attack) and Social Security (might be cut to 75% of benefits in the next decade). This ensures a state of lifelong work and perpetual fiefdom for our citizens.

You said it! 

There is no real tax reform if the debt limit increases and entitlement programs (S/S, Medicare, Medicaid, etc.) are curtailed. I agree with a prior comment, a tax increase is needed and loopholes closed that allow the wealthy to avoid paying a fair share of their total income.

Thanks for sharing your view. Now go tell Congress. Seriously. 

I actually just had to look at my latest pay stub to check how much I'd contributed to my 401K this year. When I first started working, fresh out of college, I started contributing enough to my company's 401k plan to earn the company's match. A couple of career changes later, a few bumps up in percentage contributions later, and I'm not maxing out but contributing a significant amount before my employer match. And because it's become so automatic, I don't even notice the money not being in my paycheck. This proposal is such a horrible idea. Even beyond the tax breaks, capping the amount that folks can contribute to a 401k would require a large number of individuals to go searching for different investment options for the rest of the money they're currently investing in 401ks. For those of us who weren't raised in households that invested, 401ks have always been an easy option to save/invest. I know that personally all of the other options always seem somewhat overwhelming, and I can't imagine having to do the research to find an alternative for the rest of my current investments.

You have just made the point in such an excellent way of why 401 (k)s and other such workplace plans work?

 

Just subscribed!

Thank you!

I did that with Verizon when my spouse traveled to Canada. We set up an international plan that only cost a pittance for his calls there, but I found out he had made a bunch of trip planning calls in advance of the trip, which were charged at the regular (higher) rate. While I was chatting with the service rep to set up the plan for his trip, I said "Gee, I wish I had known about those planning calls, I would have signed up for the international plan earlier." I honestly wasn't expecting anything--I was just reacting. The rep adjusted the charges on the spot. (I think because I had been a long-time customer?)

Love it. Thanks.

OK, now that I've read they're planning to reduce the pretax limit to $2400/year, so that really rich people and corporations can get their tax cuts, I have nothing to else to say. Even with my wife and I each putting in $10k/year (we're in our 30s), some retirement calculators suggest we put in more. Even if you work hard, spend thrifty, take personally responsibility, be ambitious, all the things that Republicans espouse, they turn around and put up walls (figuratively and literally) to the ladders of opportunity and success. We get the government that we deserve, and when the ruling party is this out-of-touch, there's a very helpless sense. All my representatives are from the useless (out of power) party, so I have no voice, and "my president" is someone who appeals to only 35% of the populace.

You have a voice. It might seem like it's muted but it's not. Your vote always counts. Your voice always counts. 

We can tweet and post on Facebook and support folks like me who have the ear of the powers to be. 

We have to fight. 

Senior discounts! Go for it.

Yup. I actually recently went, "Ah shucks," when I learned I was too young to qualify for a senior discounts.

I'm older than I look. 

One year we paid our taxes late because our second child came early! I paid as soon as I could, then wrote to the IRS (and included a photo of both cute kiddos) explaining what happened. They sent us a one-time refund of most of the penalty and interest! I sent a copy of their letter with a similar letter to my state tax authorities and they gave us a refund too! Never hurts to ask (or include cute photos - maybe use cats if you don't have kids!)

Okay, I have have to rethink the first place winner. 

It makes me sad that so many of us know that money controls our political system, but are helpless to do anything about it. We are treated like pawns by BOTH parties, who pander to us with sound bites, but then follow through with only empty promises. When will people wake up and see that our current system is fundamentally broken? Maybe when they take away our only viable option for funding retirement people will get mad enough to do something.

I hope change happens before that.

I am a federal employee, and not a "rich" one, whatever that is-- making about $70K-- I have been contributing the max and catch-up for the last five years. My husband is retired but he has some rental income (about $25K) that covers it-- the before-tax aspect allows us to also fund a Roth. Yes, money is tight, but it's good practice for the "real life" of retirement and reduced benefits. I feel terrible for anyone who might have to try to save without the encouragement of the pre-tax aspect.

Thanks for sharing. Your stories help get the word out that these plans matter.

Please, cuss all you want. I keep wanting to scream at the walls, but I don't think my co-workers would approve.

Lol!

We know who is pushing this reduction in contribution limits. And we can vote them out. Make sure they know this will be an election issue for them.

Exactly!

My Fairfax County Business tax is due March 1st each year. One year I was late. I sent the full payment with late fee. I wrote a note explaining that my Mother had died the Friday before and I left town in a hurry. I wasn't asking for a refund, just that I not be reported to a credit agency for a late payment. A couple months later I received a check refunding the penalty amount with a yellow sticky that said "so sorry for your loss." I was really surprised and touched that this came from a government agency.

So sorry for your loss and so happy someone saw the humanity of giving you a refund.

But a small, tiny rebuke if I may. Why surprised about the note? My husband is a federal worker and he's done many things like this. Sure the bureaucracy can be cruel but many state and federal agencies are run by very caring people who probably do more of the kind of thing you experienced than we will ever know. 

They're coming for your pre-tax 401K now. Guaranteed they're going to come for your post-tax Roth when they need to.

Yup!

Thanks for the tip: I'm writing my email messages right now to my Senator and Representative here in Michigan -- but I have a feeling one (Dem) will support me and the other will just swallow the Koolaid and NOT support the regular working people of America who value the 401K and need it!

It NEVER hurts to ask!

Thank you for your action.

They need a way to "pay" for the *^*I&@#*)(@t tax cuts on the wealthy NOW. So Cabinet secretaries and their buddies will pay LESS in taxes, while the rest of us diligently saving for retirement will pay MORE now, in effect making their *^#$ing numbers match up. Sorry, Michelle, this stuff just makes me swear....

Swear all you want -- just for today. Then we got to stop cussing y'all. 

Echoing Michelle - why are you planning on spending so much money on your wedding. Since you're praying together it sounds like you're religious. Why not have a cake and punch reception in your place of worship's hall, with your community around you celebrating your marriage? This sounds just the ticket.

Definitely a good ticket. 

Live in Repub state - just called every Rep and Sen to express my horror at messing with my 401K - actually had to explain to the peeps answering the phone how this would INCREASE my taxes and CUT into my retirement savings! Call! Everyone, please call, especially if you have Republican representatives in Congress! They must hear our screams!

Thank you for your action.

 

You know I'm so mad I'm WAY over my time. But wanted to get to more of your comments on this 401k issue (and still answer other questions too.)

From an earlier chatter: "This makes sense since if you're making $60,000/year, you can't contribution $18,000 to your 401k." My wife and I make a combined income below $120k and yet we both max out our 401k plan. It's a matter of priorities. We don't have to spend much more than we did ten years ago to be as happy as we were ten years ago, so we put the extra income into retirement instead -- so we can be that happy decades down the road.

I hear you but some folks have a lot of other expenses. For example, I don't max out because I was also saving to send my kids to college debt free. Also trying to pay off my mortgage before I retire, which will help me live on less in retirement. 

Max if you can but I understand if you can't if you have other financial obligations that also help your financial situation.

I've called every Congress person I can think of - asking all family members to do the same. It doesn't MATTER what the average size of the account is or how many people are saving right now - the point of the 401K was to ENCOURAGE PEOPLE TO SAVE FOR RETIREMENT! By cutting that avenue from a river to a trickle, people will save LESS and DEFINITELY will pay MORE in taxes - this cap proposal is outrageous! Can you tell I'm a bit upset?

WE have a voice y'all. Let's use it.

Please follow me on Twitter @SingletaryM and use the hashtag #dontraidmy401k to also get others to speak up. We know the president tweets and is led by tweets. So let's tweet!

Broke my new phone just after the one month warrantee. T-moble gave me a $50 credit on my bill as a way to pay towards the new one. I also think it was because I'm a good customer.

Or they would still make money. Nonetheless, every bit helps. 

I am of a different generation but for the millennial population: this 401k proposal isn't a bad thing. I contribute to my TSP (not the full 18k but getting very close) and there are two pots of money you can contribute Roth TSP and Regular TSP. In the proposal, I would be capped at $2400 or $2500 in the latter pot but nothing is stopping me from contributing to the Roth TSP to get to 18k. I pay the taxes now and later on, in theory, won't have to pay the taxes when I withdraw. I contribute a good chunk to Roth TSP and only 1% in Traditional TSP. It works for me. On the 529s: the GAO has been very clear that the only people are contributing to 529 plans tend to be on the higher end of the income scale. The only thing that the last Administration would have done was to tax the earnings (you're already contributing post-tax dollars to a 529). And so what? If you earn money in a brokerage account, you have to pay taxes on those earnings anyway. And, the people who are using 529s aren't Pell Grant eligible anyway so I have zero sympathy for them.

Okay so on the 529 front  you are wrong. It's not just high net worth individual. 

And again, anything that will discourage people from saving for retirement is not good for the individual or our country.

But I respect your right to voice your opinion. 

I was late to the chat but thought this quote from the WaPo says it all: House Republicans were “asked to vote for a budget that nobody believes in so that we have the chance to vote for a tax bill that nobody’s read,” Representative Matt Gaetz, Republican of Florida, complained this week.

So glad I went over because that is indeed a great but sad quote. 

I bet you totally made the day of the IRS employees who process requests for waivers of penalty and interest.

I agree.

I try hard not to be bitter and twisted that some of us have no voting representation in Congress ... .

Don't have to be bitter. And please don't cuss when you call.

Be polite but firm. This is a very bad idea. 

Okay, I have to sign off. Got a column to finish. One of the best chats ever. I hear and feel your passion. I loved the "it never hurts to ask" comments (keep them coming. Send to colorofmoney@washpost.com.

And I know I spent a lot of time on 401k but I see your questions about other things. Please come back next week or look for my column, I'll try to answer some there in the coming weeks if I again don't get to them here. 

I really appreciate your time and your participating in the chat. This is one of my favorite times of the week -- with you, old and new comers. 

Take care and remember we have a voice. Go to twitter, follow me and use the hashtag #dontraidmy401k 

Or send me a Facebook post. 

Together, not just on this, but many things financial we can be heard. 

In This Chat
Michelle Singletary
Michelle Singletary writes the nationally syndicated personal finance column, "The Color of Money," which appears in The Post on Wednesday and Sunday and is carried in more than 120 newspapers.

• Read recent columns
• Subscribe to Michelle's newsletter
• Color of Money Q&A Archive
Recent Chats
  • Next: