Joe Biden’s Plan for Older Americans 

Excerpts from the Biden Plan – the thing is there are plenty of existing incentives the major one being helping to assure ones future financial security.

IV. EQUALIZE SAVING INCENTIVES FOR MIDDLE-CLASS WORKERS In the modern retirement landscape, a sound retirement begins with years of diligent saving. While other aspects of the Biden Plan will help raise wages for workers and reduce costs for spending like child care and health insurance, the Biden Plan will also ensure that middle-class families get a leg up as they grow their nest egg.

And all that without raising taxes or only raising them on a small percentage of Americans.

Under current law, the tax code affords workers over $200 billion each year for various retirement benefits – including saving in 401(k)-type plans or IRAs. While these benefits help workers reach their retirement goals, many are poorly designed to help low- and middle-income savers – about two-thirds of the benefit goes to the wealthiest 20% of families.

Poorly designed? Benefits go to wealthiest families? You mean because the 20% pay most of the taxes and it’s a revelation that if there are tax benefits they go more to those who actually pay taxes.

The Biden Plan will make these savings more equal so that middle class families can enter retirement with enough savings to support a healthy and secure retirement. President Biden will do so by: Equalizing the tax benefits of defined contribution plans. The current tax benefits for retirement savings are based on the concept of deferral, whereby savers get to exclude their retirement contributions from tax, see their savings grow tax free, and then pay taxes when they withdraw money from their account. This system provides upper-income families with a much stronger tax break for saving and a limited benefit for middle-class and other workers with lower earnings.

The Biden Plan will equalize benefits across the income scale, so that low- and middle-income workers will also get a tax break when they put money away for retirement.  

Everyone who pays taxes gets a tax break and always has. And the tax breaks are limited by law for higher income earners and always have been.

The problem is not tax benefits, it’s getting people to save, to pay attention to their investments, to modifying their spending to allow saving more.

Here’s a thought, make the earnings on a 401k distribution after retirement tax-free up to a certain income limit, say $40,000 a year.

Removing penalties for caregivers who want to save for retirement. Under current law, people who work as caregivers without receiving wages are ineligible to get tax breaks for retirement saving.

The Biden Plan will allow caregivers to make “catch-up” contributions to retirement accounts, even if they’re not earning income in the formal labor market, as has been proposed in bipartisan legislation by Representatives Jackie Walorski and Harley Rouda.

Giving small businesses a tax break for starting a retirement plan and giving workers the chance to save at work. As proposed by the Obama-Biden Administration, the Biden Plan will call for widespread adoption of workplace savings plans and offer tax credits to small businesses to offset much of the costs.

Under Biden’s plan, almost all workers without a pension or 401(k)-type plan will have access to an “automatic 401(k),” which provides the opportunity to easily save for retirement at work – putting millions of middle-class families in the path to a secure retirement.

Source: Joe Biden’s Plan for Older Americans | Joe Biden for President

3 comments

  1. Please note also that: I’m a 64 year-old engineer who happens to work for a small company that does not offer a 401-K plan, or company sponsored group medical insurance. The current laws/system limit my tax-sheltering retirement savings to $7,000/yr for an IRA, and to $7,100/yr for an HSA. If I was working for a large corporation, that offered a 401-K plan, I would be able to tax-sheltered save up to an extra $26,000/yr (and that is just my contributions, not including the contributions that companies usually match). Also, because I have to provide for my own health insurance plan, I am not able to delay signing-up for Medicare under the SEP exemption, because I don’t happen to have the privilege/benefit of being covered by a company sponsored group health plan…there are some definite in-equilities and unfair privileges available to some sector of the working class…

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    1. You have a point. There is no reason for different limits between IRAs and 401k plans and as with employer benefits you should be able to buy health insurance industry a pretax basis regardless of an HSA.

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  2. As political gibberish goes, that is about right. I have no ideal what it means. Equalize what again? How do you raise the minimum wage and reduce child care costs? Daycare centers are required to “x’ amount of caregivers per x amount of children for a given age. THe smaller the child, the more caregivers and a minimum of two at all times. My wife worked at a daycare in the late 1980’s just to get a discount on child care. But the math never worked out to me. Turns out that welfare paid most of the bills at the daycare. You can’t make $15 / hr for 8 hours a day and have to pay someone else $11 / hr for 10 hours to watch your child. There is no way to make daycare cheaper only to shift the costs.

    My proposal would be to make all of social security tax free both at the federal and state levels as a start. There is no reason why a stay at home should not be allowed to have an IRA or a Roth-IRA. They are doing important work that you would otherwise have to pay for.

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