While 401(k) retirement savings plans are hardly perfect, they do serve an important purpose: making it easier for Americans to put money away for their later years.
But among the tax reform proposals currently being discussed is one that would convert part or all of workers’ tax-deferred 401(k) contributions to Roth 401(k) contributions, which are made after taxes have been removed. That could significantly increase the federal income taxes that middle-income workers would pay throughout their lives. And it could reduce the amount of money they could spend throughout their lives after paying taxes.
A typical older middle-income worker could lose $500 per year if their 401(k) plan is Rothified (or should I say “Rothifried”)?
