Not in the tax world from trad to Roth. This really calls for that backdoor from trad to Roth. Most financial advisors don’t offer it up as an option because they usually don’t make a dime off of it, but I think it’s a good thing to do.
I know this thread is doom and gloom but I honestly think that at some point the Fed govt is going to look at 401ks as a cookie jar for tax revenue needs once most boomers have cashed in. That worries me for long-term 401k prospects.
i was assuming that the stock was in a regular brokerage account -
which is where i was thinking a wash might be applied.
otherwise a backdoor IRA is required to avoid the penalty (i think?).....
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I'm not sure - IRAs/401ks are a staple of wealthy america - and the people that make the rules.
They usually don't stab themselves. Consider the ROTH IRA, it favors the wealthy, as they can afford the tax
on the initial earn, and max the contribution, creating a tax free stream in the future.
Sure everyone gets to participate, and should, but it is a lot easier for higher earners.
Consider the company match on regular 401k, it usually specifies something like 50% of the first 6% of salary.
well, what if 6% of salary is above the max contribution? max contrib is $20k, company match is $10k,
if you were doing well, making $100k per year, then 6% is $6k, and the match would be $3k. Even if you were a monster saver
and put away the same $20k as the executive.
They've made a couple moves this year on the honeypot front - a schedule to push the RMD out a couple years.
Sure, some people are working later, esp white collar, where the physical tolls aren't that great, and the life expectancy
is longer. But it does delay the tax revenue.
Also, the 5 year inheritors limit - this is a good thing. The taxes are due, the person that left the surplus would have rather used it.
It should have its own schedule tho, rather than the bracket of the inheritor. some people might pay 10% while others 33% on
found money.
I also think they should do away with deferred compensation plans. but that's just me.