4 ms·

So the wealthy are sheltering a modest value every year in their 401k? (the contribution limit this year is ~$20,000, which hey, good for people that can set t

So the wealthy are sheltering a modest value every year in their 401k? (the contribution limit this year is ~$20,000, which hey, good for people that can set that much earned income aside, but I'm not sure they are "the wealthy" that you mean. Even the considerably higher overall contribution limit for catchup contributions doesn't seem like something "the wealthy" would be worried about for tax sheltering)

toomuchtodo 4y ago
https://news.ycombinator.com/item?id=31326933 https://news.ycombinator.com/item?id=31326933 https://news.ycombinator.com/item?id=29780629 https://news.ycombinator.com/item?id=29780629 https://www.bogleheads.org/wiki/Mega-backdoor_Roth https://www.bogleheads.org/wiki/Mega-backdoor_Roth https://www.washingtonpost.com/outlook/2022/04/20/retirement-ira-inequality-budget/ https://www.washingtonpost.com/outlook/2022/04/20/retirement... https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3997927 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3997927 https://www.epi.org/publication/retirement-in-america/ https://www.epi.org/publication/retirement-in-america/ https://www.census.gov/library/stories/2022/08/who-has-retirement-accounts.html https://www.census.gov/library/stories/2022/08/who-has-retir...
- maxerickson 4y ago
  Okay, do I need to read through all that and find out how your definition of "the wealthy" aligns with the contribution limits? Roths aren't even vaguely related to the origin of 401ks, so I guess no need to look at those.
  - toomuchtodo 4y ago
    Whether you read them is up to whether you value citations for my thesis. I have no preference either way, as nothing material will result from me attempting to prove the thesis in this thread. I hope the links are helpful to whomever encounters the thread in the future. If I didn't believe my thesis was on a solid foundation of facts, I wouldn't have asserted it.
    - maxerickson 4y ago
      Whether you read them is up to whether you value citations for my thesis. I have no preference either way, as nothing material will result from me attempting to prove the thesis in this thread. I hope the links are helpful to whomever encounters the thread in the future. If I didn't believe my thesis was on a solid foundation of facts, I wouldn't have asserted it. 401ks were absolutely initially designed as a tax shelter (a way to defer taxes on income). It may have been a "loophole" at the beginning, but regulation and legislation quickly embraced it. My contention is that a tax shelter that is subject to relatively modest contribution limits was not initially designed for the wealthy. Defined benefit plans are great for the recipients, but we have also sort of proved that we are terrible at properly funding them. Making the future pay for present day promises isn't likely to be sustainable.
      - toomuchtodo 4y ago
        I believe we’ve equally proven that defined contribution plans are fairly worthless compared to pensions, when 50% of retirees have no retirement savings and the median balance of these accounts is in the low five figures, no? Workers are simply not lucky enough (to have the financial means), nor financially savvy enough, to manage this themselves across a lifetime. From my last link: > The median value of 401(k)-style accounts was $30,000 and the median IRA or Keogh value was $30,820 — not statistically different. > The median total amount employees contributed in 2020 to their own IRA or Keogh account was $2,514. The median amount they contributed to their 401(k)-style accounts ($3,599) and pension plans ($3,257) was slightly higher. Future research will examine employer contributions in combination with employee contributions. Come on, based on available data this isn’t a functioning asset accumulation system for worker retirement, it’s theater to keep the hoax going. Outliers are going to trot out their six and seven figure account balances, but they are just that: outliers.
        maxerickson 4y ago
        It's not like every job came with a pension before 401ks (apparently it peaked at about 50%). And partially vested pensions have their own issues (deferring compensation and then not receiving it). I'm not actually arguing that 401ks are a solution to retirement though. I'm arguing that they weren't initially designed as a tax shelter for the wealthy. I'm not sure what an improved system looks like. Probably something like a pension where the employer is not allowed to be the entity responsible for paying out the benefit (so that present day promises can't be funded with future contributions).
- gfarah 4y ago
  Around 15% of my apartment building here in Medellín, Colombia are retirees that moved from the US. Cost of living being 1/5 of of the US I would be doing the same.

toomuchtodo 4y ago

https://news.ycombinator.com/item?id=31326933 https://news.ycombinator.com/item?id=31326933 https://news.ycombinator.com/item?id=29780629 https://news.ycombinator.com/item?id=29780629 https://www.bogleheads.org/wiki/Mega-backdoor_Roth https://www.bogleheads.org/wiki/Mega-backdoor_Roth https://www.washingtonpost.com/outlook/2022/04/20/retirement-ira-inequality-budget/ https://www.washingtonpost.com/outlook/2022/04/20/retirement... https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3997927 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3997927 https://www.epi.org/publication/retirement-in-america/ https://www.epi.org/publication/retirement-in-america/ https://www.census.gov/library/stories/2022/08/who-has-retirement-accounts.html https://www.census.gov/library/stories/2022/08/who-has-retir...

maxerickson 4y ago
Okay, do I need to read through all that and find out how your definition of "the wealthy" aligns with the contribution limits? Roths aren't even vaguely related to the origin of 401ks, so I guess no need to look at those.
- toomuchtodo 4y ago
  Whether you read them is up to whether you value citations for my thesis. I have no preference either way, as nothing material will result from me attempting to prove the thesis in this thread. I hope the links are helpful to whomever encounters the thread in the future. If I didn't believe my thesis was on a solid foundation of facts, I wouldn't have asserted it.
  - maxerickson 4y ago
    Whether you read them is up to whether you value citations for my thesis. I have no preference either way, as nothing material will result from me attempting to prove the thesis in this thread. I hope the links are helpful to whomever encounters the thread in the future. If I didn't believe my thesis was on a solid foundation of facts, I wouldn't have asserted it. 401ks were absolutely initially designed as a tax shelter (a way to defer taxes on income). It may have been a "loophole" at the beginning, but regulation and legislation quickly embraced it. My contention is that a tax shelter that is subject to relatively modest contribution limits was not initially designed for the wealthy. Defined benefit plans are great for the recipients, but we have also sort of proved that we are terrible at properly funding them. Making the future pay for present day promises isn't likely to be sustainable.
    - toomuchtodo 4y ago
      I believe we’ve equally proven that defined contribution plans are fairly worthless compared to pensions, when 50% of retirees have no retirement savings and the median balance of these accounts is in the low five figures, no? Workers are simply not lucky enough (to have the financial means), nor financially savvy enough, to manage this themselves across a lifetime. From my last link: > The median value of 401(k)-style accounts was $30,000 and the median IRA or Keogh value was $30,820 — not statistically different. > The median total amount employees contributed in 2020 to their own IRA or Keogh account was $2,514. The median amount they contributed to their 401(k)-style accounts ($3,599) and pension plans ($3,257) was slightly higher. Future research will examine employer contributions in combination with employee contributions. Come on, based on available data this isn’t a functioning asset accumulation system for worker retirement, it’s theater to keep the hoax going. Outliers are going to trot out their six and seven figure account balances, but they are just that: outliers.
      - maxerickson 4y ago
        It's not like every job came with a pension before 401ks (apparently it peaked at about 50%). And partially vested pensions have their own issues (deferring compensation and then not receiving it). I'm not actually arguing that 401ks are a solution to retirement though. I'm arguing that they weren't initially designed as a tax shelter for the wealthy. I'm not sure what an improved system looks like. Probably something like a pension where the employer is not allowed to be the entity responsible for paying out the benefit (so that present day promises can't be funded with future contributions).
gfarah 4y ago
Around 15% of my apartment building here in Medellín, Colombia are retirees that moved from the US. Cost of living being 1/5 of of the US I would be doing the same.