Re:IKEA buys 11,000 acres of U.S. forest to keep it from bei...
by ashtonkem on Wednesday January 27, 2021 @03:18PM
(#25933365)
While there are certainly issues in the tax code, you’re absolutely just making up the history and intent of the 401k. The 401k was not setup to help big business, quite the opposite. They were setup as an explicit alternative to the pension systems that historically were how employees retired, and pensions absolutely favor large companies that can afford them. 401k programs allow much more employee choice and mobility, which they’ve arguably achieved.
Re:IKEA buys 11,000 acres of U.S. forest to keep it from bei...
by lotsofpulp on Wednesday January 27, 2021 @04:14PM
(#25934032)
Whatever the history is, it's been 40+ years since it started, and legislators have subsequently gone through a lot of effort to create a two tier system (IRAs vs 401k) which heavily favors employees of large businesses than can afford to pay high wages.
When something so blatantly tilted towards the rich, white collar world exists, and can so easily be fixed (by simply matching the terms of the IRA to the 401k), and has not been fixed for over 4 decades, I then take it to be intentional.
A 401k has the specific purpose of helping large businesses maintain a competitive advantage over small businesses. If the government wanted to help individuals fund their retirement years, then there is no reason to involve employers in the tax code. They could simply issue the same rules and contribution limits for IRAs.
But they don't. They punish you if you're employed by an employer that doesn't offer a 401k, by setting your contribution limit to a paltry $6k while 401k participants get tens of thousands, and your contribution limit is zero if your spouse is eligible for a 401k and your income is over a certain amount.