401(k) plans are not going anywhere

Ary Rosenbaum - The Rosenbaum Law Firm P.C.
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

Labor economist and TikTok creator Kathryn Anne Edwards, in a recent webinar, claimed that 401(k) plans alone are failing to solve the retirement crisis in America and that the federal government needs to take a more active role in providing access to retirement savings.

Edwards argued the Federal government should stop subsidizing 401(k) accounts (by making contributions tax-deductible) because she says it uses about 1% of the country’s GDP (in potential, unrealized taxes) to benefit the retirement savings of the wealthiest 25% of Americans.

Instead, she supports a program similar to the Federal Retirement Thrift Savings Plan. The program would give workers access to portable, tax-advantaged retirement savings accounts, with federal matching contributions for certain low- and middle-income workers.

I think if we want to eliminate 401(k) plans, you can’t find a worse idea than having retirement accounts with the Federal government. As far as tax incentives benefiting the rich, the fact is that with a high tax burden and a high cost of living, many people can’t save for retirement if they are low or middle-class employees.

Too much blame is hoisted on an inanimate object (401(k) plans), and too little blame is placed on a government that failed to create a Social Security trust fund and failed to rein in reckless spending. In addition, Wall Street makes so much money off 401(k) plans, that their lobby won’t allow a public sector replacement.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Attorney Advertising.

© Ary Rosenbaum - The Rosenbaum Law Firm P.C.

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Ary Rosenbaum - The Rosenbaum Law Firm P.C.
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