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> They'd qualify but I'm pretty sure when the law was first written it didn't have them in mind. It was specifically to prevent top level executives or busines
by chimeracoder 10y ago
> They'd qualify but I'm pretty sure when the law was first written it didn't have them in mind. It was specifically to prevent top level executives or business owners (>=5% of company) from creating 401k plans for only themselves.
Even if that was the rhetoric used when creating the rule, I'd be very skeptical of assuming that was the case, rather than it being motivated by a desire to increase tax revenue, as a lot of these tax rules are designed to do. $115,000 is a really low threshold to use to define "executive" - many blue-collar workers make far more than that.
(And furthermore, the rule still does not prohibit highly-compensated employees from contributing; it just requires them to pay taxes on the excess of the permitted amount.)
- actuallyalys 10y agoI'd challenge you on many. According to Wikipedia, only seven percent of workers make more than 100,000, never mind "far more than 115k": https://en.wikipedia.org/wiki/Household_income_in_the_United_States#Distribution_of_household_income https://en.wikipedia.org/wiki/Household_income_in_the_United.... Also, wouldn't this rule lower revenue because more workers end up contributing? (Assuming that executives would adjust their plans rather than pay extra taxes.)
- deleted 10y ago[deleted]
- koolba 10y ago> 115,000 is a really low threshold to use to define "executive" - many blue-collar workers make far more than that. Quantify "many". $115K/year comes out to an hourly rate of $57.5 (assuming 2K hours). Even factoring in overtime (1.5x) or double time (2x), I doubt a significant percentage of people make that much at a blue collar job.