Commentary: Ordinary Americans struggle to fund their 401(k) plans while plutocrats fill theirs with tax-free millions
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Set us as preferred For a half-century, Congress has been offering middle- and working-class Americans options for tax-advantaged individual retirement savings, largely to compensate for the disappearance of traditional pensions.But the transition from so-called defined benefit pensions to defined contribution accounts such as 401(k) plans and individual retirement accounts hasn’t worked for millions of Americans.Roughly 40% of working Americans don’t have any retirement savings at all, and among those who do, their savings are too meager to support them through their retirement years.That isn’t the case for America’s richest households.
The number of 401k and IRA accounts with balances of tens of millions of dollars has mushroomed in recent years, an artifact of ever-expanding wealth inequality.The 401(k) isn’t working really well now for many middle- and lower-income employees....
Many of them can’t afford to have money taken out of their paycheck even if they have the opportunity to do so.— Ted Benna, “Father of the 401k”“Tax-preferred retirement accounts are not supposed to be a loophole for the ultrarich to shelter immense fortunes,” Sen.Ron Wyden (D-Ore.) said recently in introducing a measure to cap contributions to retirement accounts worth $10 million or more and increase the required annual distributions from those mega-accounts.
“They’re a lifeline for working Americans who may not otherwise have a dignified retirement.” Wyden introduced the bill along with Rep.Richard Neal (D-Mass.).
They’re ranking members of the Senate Finance Committee and the House Ways and Means Committee, respectively.Even Ted Benna, who is often dubbed the “the father of the 401(k),” is doubtful that his brainchild has served its target beneficiaries.“The 401(k) isn’t working really well now for many middle- and lower-income employees,” Benna told Bloomberg last month.
One reason is ...