As part of discussions on a tax reform, some Republicans are considering taking away one of the top reasons people invest in their company’s 401(k) plan.

“One idea quietly being discussed would be taxing the money that workers place into their 401(k) savings plans up front,” reported Nancy Cook for Politico.

A headline on sums up what a lot of folks on Twitter feel about the proposal: Do you have a 401K? Trump considering taxing your contributions to fund massive tax cut for wealthy

The tax advantage of a 401(k) is huge. It’s how my husband and I have been able to save so much for retirement.

A tax change could raise billions of dollars in revenue by removing the 401(k) deduction. You contribute to a 401(k) account with pre-tax dollars, up to $18,000 right now. If you’re over 50 you can shield another $6,000, called a “catch up” contribution. The tax break is a great incentive to get people to save. And even with the break, people still aren’t saving enough.

“I gasped when I read this week that House Republicans may tinker with the hugely popular 401(k) retirement benefit as part of their tax reform package,” wrote The Washington Post’s Thomas Heath. “I love my 401(k). I will be 62 in a few weeks and have spent the past three-plus decades preparing for retirement by plowing as much money as I was legally allowed by the Internal Revenue Service into my 401(k). My wife and I are able to reduce our income, and thereby reduce our taxes, and watch as the money compounds tax free.”

A 401(k) without the tax break would basically be a Roth IRA. With a Roth you make contributions after taxes, which means your tax bill might go up and you could have less money working for you over the years. If you earn over a certain amount you can’t even contribute to a Roth.

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I’d like to hear from you. What do you think of getting rid of the 401(k) deduction? Send your comments to

Retirement rants and raves
I’m interested in your experiences or concerns about retirement or aging. This space is yours. It’s a chance for you to express what’s on your mind.

When discussing finally tapping our retirement savings or even Social Security, I argue that we should delay as long as possible. But my husband keeps saying that we shouldn’t wait too long to enjoy our savings. What if something happens and we get too sick to travel or do the many things we plan to do when we retire, he argues.

After reading the following email from Robbye Langenfeld of Sarasota, Fla. I now agree with my husband.

“I’m a federal retiree (10 years ago at age 64),” Langenfeld wrote. “Because I had always had excellent health (aside from colds) and never knew anyone who discussed medical issues or expenses (even my parents), I was totally unaware of medical terms, etc. Even at age 65 when Medicare became available, I didn’t know what it was, much less why I should pay the extra monthly expense when I’m never sick. Thank goodness, my retired friends talked sense into me. Despite whining and complaining, I signed up. But I brushed off their attempts of getting me to take long-term care insurance.

Keep reading.

“Well, two years into retirement, my mother got very sick and I was shocked at her annual care expenses,” Langenfeld wrote. “Shortly after her death with the realization of terribly devastating medical expenses, I purchased long term care insurance (expensive because I was 67, but still in excellent health). Well, in my fourth year of retirement, I fell and cracked my knee, then came down with an autoimmune disease that required two years of treatment, had countless dental issues, and then osteoporosis kicked in. So, in a matter of two years my medical expenses were already over $300,000. Of course, I paid deductibles (again, still complaining), but it finally dawned on me how profoundly thankful I was for my insurance and Medicare and how lucky I had been with all those years of great health.”

Langenfeld wanted me to pass on this advice: Don’t take good health for granted and make the sensible choices for your future while you can.

Your sharing might help others. So send your comments to Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

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Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict.)

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