OPINION: Beware Assault On Your 401K
By Ilene Davis, CFP // January 2, 2013
BREVARD COUNTY • COCOA, FLORIDA–In the shadow of all of the Beltway ineptitude surrounding the “Fiscal Cliff,” there is an issue looming that may significantly affect our 401Ks.
Although many workers say they would prefer a lifetime pension to a 401K plan, the fact is that most companies can no longer afford to offer lifetime pensions, and do not want the uncertain financial obligations that a pension plan entails.
As a financial advisor, I have seen the benefit of 401K plans. For clients who have been consistently investing in their 401k since the 1980’s or before, the 401K provides more income than most get from social security. Unfortunately there are legal limitations on how much pre-tax (tax-deferred) income dollars can be allocated to a 401K. I guess politicians don’t like the prospect of so many of their serfs to have that much financial independence.
One of the proposals under consideration to cut the deficit is to limit 401K (combined employee/employer) contributions to THE lower of $20,000 or 20% of income. If a 401K plan is or has been a significant part of your wealth accumulation/retirement funding program, consider joining a campaign to save 401K plans in their current form.
Consider the following to voice your concern about the future of your 401K. You may also want to check with your employer to see if they are doing something as well:
1. Visit www.savemy401k.com
2. Send an automated email to your members of Congress, and then
3. Keep the campaign alive by asking others to get involved.
Its your future. If you want to totally entrust it to the same kind of politicians that have put social security in jeopardy, that is up to you. Otherwise, you might want to contact Congress to not just keep the current amount, but double the limits so even more money could be saved on a tax deferred basis
ABOUT THE AUTHOR
Ilene Davis, a resident of Brevard County since 1971, is a Certified Financial Planner with a bachelors degree in Mathematics from the University of Michigan, a bachelors degree in Accounting from Rollins College, and a Masters in Business Administration from Webster University. Ms. Davis became a stockbroker in 1982, earned her designation as a Certified Financial Planner in 1984, and with a desire to serve clients more on her own terms, opened her own financial consultant office in Cocoa Village in 1986. She is committed to helping each client create their own “Financial Freedom Fund,” and believes strongly in free market capitalism and a “hand up rather than a hand-out” as the best path to prosperity.