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What do think of this law?

Discussion in 'Political Discussion' started by PatriotsReign, Dec 7, 2009.

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  1. PatriotsReign

    PatriotsReign Rookie

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    We have a law in this country that severely limits how much you can put into a 401K based upon your salary. This law states that if you make over $110K/yr, you can only contribute 2% more the average contribution level of your company.

    For example, if your company average is 4% and you make over $110K, then you can only contribute 6% annually.

    WTF!!! Is this supposed to "even the playing field" or what? Does our gov't feel sorry for those who only want to contribute 4%?

    Now keep in mind that if you made 50-$60K all your life and suddenly get a job that pays $112K, you immediately get your contributions cut. The law doesn't take into consideration how many children you may have, how much (or little) you have in your 401K or the cost of living in your area.

    A person making $106K can contribut about $17K/yr and the person making $112K is only allowed to contribute $6K/yr. What a joke our lawmakers are!

    http://www.irs.gov/newsroom/article/0,,id=187833,00.html
    Last edited: Dec 7, 2009
  2. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    I don't suppose you have a link to this law, do you?
  3. PatriotsReign

    PatriotsReign Rookie

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    Highly Compensated Employees (HCE)

    "To help ensure that companies extend their 401(k) plans to low-paid employees, an IRS rule limits the maximum deferral by the company's "highly compensated" employees, based on the average deferral by the company's non-highly compensated employees. If the rank and file saves more for retirement, then the executives are allowed to save more for retirement. This provision is enforced via "non-discrimination testing". Non-discrimination testing takes the deferral rates of "highly compensated employees" (HCEs) and compares them to non-highly compensated employees (NHCEs). An HCE in 2008 is defined as an employee with compensation of greater than $100,000 in 2007 or an employee that owned more than 5% of the business at any time during the year or the preceding year.[8] In addition to the $100,000 limit for determining HCEs, employers can elect to limit the top-paid group of employees to the top 20% of employees ranked by compensation.[8] That is for plans whose first day of the plan year is in calendar year 2007, we look to each employee's prior year gross compensation (also known as 'Medicare wages') and those who earned more than $100,000 are HCEs. Most testing done now in 2009 will be for the 2008 plan year and compare employees' 2007 plan year gross compensation to the $100,000 threshold for 2007 to determine who is HCE and who is a NHCE.

    The average deferral percentage (ADP) of all HCEs, as a group, can be no more than 2 percentage points greater (or 150% of, whichever is less) than the NHCEs, as a group. This is known as the ADP test. When a plan fails the ADP test, it essentially has two options to come into compliance. It can have a return of excess done to the HCEs to bring their ADP to a lower, passing, level. Or it can process a "qualified non-elective contribution" (QNEC) to some or all of the NHCEs to raise their ADP to a passing level. The return of excess requires the plan to send a taxable distribution to the HCEs (or reclassify regular contributions as catch-up contributions subject to the annual catch-up limit for those HCEs over 50) by March 15 of the year following the failed test. A QNEC must be an immediately vested contribution."


    401(k) - Wikipedia, the free encyclopedia
  4. mcgraw_wv

    mcgraw_wv Rookie

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    Honestly it makes sense to me. And to be honest, I don't think we should allow for any tax free money for retirement. You should not have to be bribed into saving for your retirement.

    As well, there are plenty of studies that show 401k only benefits the Rich and not the middle class worker. 401k is a great benefit to those who's 4% is a lot of money, but more people's 4% is a small 2 - 3k a year.

    So the reality is the Higher paid employees everywhere get even more money from their employers via matching, and get even more money tucked away for retirement tax free.

    Why not remove the complexity, reduce the tax rate 1% and remove the tax free status of 401ks.

    Overall everyone is better off as we pay less tax, and their is no percentage based tax saving which dramatically favors those who make a lot more money.
  5. PatriotsReign

    PatriotsReign Rookie

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    Because of course we don't want to make people who make less feel bad, do we?:rolleyes:

    That's the whole incentive to make MORE! Because you can SAVE more! And making 401 contributions non-taxable incents everyone to save more for retirement.

    Making more isn't unfair to anyone....you do know and understand this, don't you?
  6. BelichickFan

    BelichickFan B.O. = Fugazi PatsFans.com Supporter

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    #24 Jersey

    401Ks themselves are a separate issue but I think this particular exception sucks (although it doesn't affect me). There is an IRS annual cap of $16.5K that you can contribute and that cap should suffice, regardless of the average of your workplace.
    Last edited: Dec 7, 2009
  7. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    Unless of course you're hiding it and refusing to pay income taxes on it....in which case it's grossly unfair to everyone else who plays by the rules.
  8. efin98

    efin98 Rookie

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    You didn't answer his question.
  9. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    It wasn't me he was asking.
    Last edited: Dec 7, 2009
  10. efin98

    efin98 Rookie

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    Sorry for the mistake.
  11. PatriotsReign

    PatriotsReign Rookie

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    Yet, you STILL responded with an irrelevant comment...didn't you dear!;)

    So how is everything down in the Beltway? Heard it was pretty cold yesterday.
  12. alvinnf

    alvinnf Rookie

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    Motivating individuals to save more for their retirement makes allot of sense. The more you squirrel away, the less of a burden you become for society. Why they wouldn't want to encourage not discourage people from it is beyond me. Oh yeah, they like their hussled masses to be beholden to them. I forgot?
  13. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    Wow, PR, talk about irrelevant comments.

    Oh and BTW, there are only a few people who know me well enough to call me "dear."

    You're not one of them.
  14. PatriotsReign

    PatriotsReign Rookie

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    ok, how's dearie? ;)

    It's called small talk. Every now & then it's ok to inquire about someone's well being. And of course, our well being is ALWAYS relevant. What could be more relevant MrsPFiVA?

    The Patriots sucked royally yesterday, don't you think? Too bad the Redskins didn't pull that one out against the "Who dat's"!!
    Last edited: Dec 7, 2009
  15. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    Interesting respectful comments... :D:D:D

    Why don't you ask Harry about the Games yesterday???
    Last edited: Dec 7, 2009
  16. PatriotsReign

    PatriotsReign Rookie

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    If you can find anything disrespectful in my comments, I'd just love to see it!

    Keep in mind the purpose of the blinking guy...:cool:
  17. PatriotsReign

    PatriotsReign Rookie

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    And this would be my reply:

    #1. Harry does not have "PATSFAN" in his screen name but MrsPATSFANinVA certainly does. So I assume she's a Patriots fan, didnt you?

    #2. I commented upon the Redskins because she lives in the Washington DC area.

    I hope that answers your questions satisfactorily.....


    JEESH!
  18. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    Yea, that is exactly what you meant...:rolleyes::rolleyes::rolleyes: no harm intended, no "ad hominen attacks\"... attacking the poster, while disregarding the content...
  19. PatriotsReign

    PatriotsReign Rookie

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    "If" you could tell me exactly what could be OFFENDING, then we could have a discussion Darryl.

    What did YOU think of the Patriots' play yesterday?

    Believe it or not, MrsPatsFaninVA and I have exchanged several civil PM's in the past....kinda like you & I have.
    Last edited: Dec 7, 2009
  20. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    Calling a woman dearie, after she called you on it is not exactly a terms of endearment... it usually denotes a very condescending, sexist attitude. Say what you will, but it is atypical misogynous behavior..

    There is expected decorum and manners, even if you get pissed off...
  21. PatriotsReign

    PatriotsReign Rookie

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    Darryl, I'm sure you're a good guy if we were to meet, but you really get a tad too wrapped up in this stuff. Women who I don't know call me "dear" or "Dearie" all the time. Sometimes it's "Sweetie" or something else endearing. But my point is "Dear" is in no way offending to anyone. Nor does it imply a specific sex.

    if the lady at the grocery store called you dear, would you be offended? Do you think she would be offended if you called her "dear"? (as in, "excuse me, I didn't see you dear")

    Take off your shoes, take a deep breath and think of just how wonderful LIFE truly is.....Yup, "It's a wonderful life" buddy. but only if we focus on all the things we have to be grateful for....just like George Bailey realized after Clarence showed him.

    Hang in there Darryl...everything is going be ok. I guarantee it!

    STOP TAKING ON THE ROLE OF BOARD SEXISM, RACISM & WHATEVER-ISM POLICE!
    Last edited: Dec 7, 2009
  22. Mrs.PatsFanInVa

    Mrs.PatsFanInVa PatsFans.com Supporter PatsFans.com Supporter

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    I haven't seen you address anyone else as "Dear" or "Dearie" since I've been here. Nor have I heard you inquire about their well-being. Nor have I seen you make pointed "small talk" about the weather in their neighborhood. I've especially not seen you do it someone whom you've recently remarked "made you tired." Forgive me for not accepting your rather glib and transparent little explaination.

    Like I said, you don't know me well enough to call me "Dear" and you just proved it. I'm neither a Pats fan nor a Redskins fan. I'm from Indiana.

    My team's winning.
  23. Wolfpack

    Wolfpack Banned

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    I think you need to relax, sweetie pie.
  24. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    We should really return to pension plans. Workers were more secure when we had pension plans and strong laws protecting them. People who had pension plans were basically set up for retirement when they retired. That money was taken out of circulation without the potential for businesses to try to lure people into new needs: stainless steel appliances, surround sound, home movie theaters, two sinks in the bathroom, and so on. Sadly, in an economic system that depends on consumerism, the contradictions sometimes cause harm.

    That said, the 401K laws are fine. They are especially intended to provide incentive for people who don't hvae a lot of money. Perhaps if we were a richer country, we could change the laws and be even more generous to the wealthy, but our tax and other laws are put into place to try to find some common balance between the cost of running the greatest nation on earth and what people can afford to pay.

    That said, if PR or anyone has good solution for making up for the lost tax revenue or for cutting things so that taxes could be dropped, I'm all ears. My experience working with addicts in a program funding by grants from the state and others is that, if anything, we need to put more money into social services. There are a lot of hurting people out there, and if you ever spend time with some of them, I think you'd have to have a heart of stone to think we don't need to do more for them.

    I listened to a young man today talk about his thoughts of suicide--he grew up in a horribly abusive home and in the last week his mother just him she hates him and will not call him anymore. But, he said, "I love her. She's still my mom." Doesn't that make your heart break? Don't you think a moral society has an obligation to do more? Is it really more important to protect the right of Tiger Woods to afford more women than the right of this young man to get some decent help?
    Last edited: Dec 7, 2009
  25. efin98

    efin98 Rookie

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    You do realize that you fell for his bait to throw the discussion off track, right?
  26. efin98

    efin98 Rookie

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    Please elaborate on this...what the heck does the personal need for expensive material items have to do with pensions? I really don't see how one is connected to the other in any way other than a personal greed that has nothing to do with them putting money into their future after work.
  27. PatriotsReign

    PatriotsReign Rookie

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    SHAME on me! You're right!
  28. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    People based their contribution to 401Ks on the amount they feel they can afford, but the allure of consumerism is quite powerful, and many people say, I'll contribute only 8% of my income to retirement because I need a plasma tv or something like that. As 401Ks became prevalent, businesses recognized the opportunity and went after it. I'm not saying that the businesses did anything wrong, but that an advantage of pensions is that they take the money out of direct circulation.

    I read a couple years ago that the average worker who had a 401K for 25 years had $114K in it. That's a disaster in my opinion. The future for the elderly in this country really sucks, and 401Ks are in part to blame, as are changes to laws protecting pensions.
  29. PatriotsReign

    PatriotsReign Rookie

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    I forgive you!

    Why did you acquire MrsPatsfaninVA if you're not a patriots or football fan? Did you want us to know you're married to PatsFaninVA?

    I typically only call women "dear". But women seem to say it to both sexes. It's all in the delivery I guess. But, there is nothing sexist about calling someone "dear". If you don't agree, have at it. I'd love to read your rationale.

    I often engage in small talk with several members here. Ask Real World. I'm always asking how things are up in NH or where ever he lives. As a matter of FACT, I did just that today long before you posted this.

    You and Darryl would make a wonderful couple!
    Last edited: Dec 7, 2009
  30. PatriotsReign

    PatriotsReign Rookie

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    Good post Patters and I agree. Corp. America has been taking away from workers benefits for years now. It was probably precipitated by weakening the labor unions. Sadly, labor unions have to take much of the blame for their demise. I mean, assembly line workers making $80K/yr is ludicrous!

    I too would love to see pensions return.
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