40 Years and 11 Days
The 40th anniversary of the Revenue Act of 1978 is nearing. The act added Internal Revenue Code Sec. 401(k). Forty years from obscure code to $6 Trillion. The reports are that early backers of the code created it as a way individuals could supplement their retirement income from a defined benefit plan. They never intended 401(k) plans to become the primary retirement wealth accumulation vehicle it has become for about 50% of tax paying Americans. It was 1981 before the first plan was submitted for approval. I encourage you to read, The Day I Designed The First 401(k) Savings Plan, by Ted Benna. http://401kbenna.com/401k-history.html.
Congress has tried to repeal or alter IRC 401(k) several times over the years when it realized the growing amount of taxes that would not be collected. Over eleven days in October this year IRC 401(k) went from budget bargaining chip to a non-negotiable topic.
Tankersley, Jim. “Republicans Consider Sharp Cut in 401(k) Contribution Limits.” NY Times, October 20, 2017
Weiss, Miles. “Here’s How Money Managers Plan To Battle 401(k) Cuts in Trump’s Tax Plan.” Bloomberg, October 22, 2017
Bryan, Bob. “Trump says ‘there will be NO change to your 401(k)’ after reports Republicans want new caps on retirement savings.” Business Insider, October 23rd, 2017
Lenzner, Robert. “Slashing Pre-Tax 401(k) Contributions Would Be A Big Middle Class Double Cross.” Forbes, October 30th, 2017
Bolden-Barrett, Valerie. “Update: GOP tax plan released, no cuts to 401k contributions.” HRDIVE, October 31st, 2017
There may be changes in the amount of pre-tax contributions and a major re-construction of the American Retirement Savings System in the future. If you are a financial sales professional currently serving or considering to serve the 401(k) marketplace you should have comfort knowing your career is on solid ground based on the duration, ferocity and quickness to protect the current 401(k) structure. Time is on your side.
December 1st, 2017