Is Congress going to take away your 401k?  Perhaps.  And if it does, the reasons it offers may shade the truth.

First, I am writing this in advance.  When you read this I will be in a remote part of Europe.  So if anyone has come out with concrete plans for dismantling the 401k I apologize for being out of date.

Secondly, we have not seen solid proposals for doing away with 401k’s.  We have seen only trial balloons.  If anyone is serious about canning them we will likely see a lot more such balloons.  And the politicians would likely do a lot of polling to find out how folks would react.

The idea floated is that 401k’s don’t do what they were supposed to do.  They were supposed to inspire us to save more.  The claim is that the $3 trillion we have stashed in 401k’s is merely what we would have saved elsewhere. That is a bit hard to swallow.

Beyond that, 401k’s came about almost by accident. The IRS created them for a few executives. Nobody in Congress intended them to be for millions of workers to save trillions of dollars.

People who want to end the 401k also point out that the tax protection they give is only for higher earners.  They are right.  It protects your retirement assets from taxes.  But half the workers in America pay virtually no income tax these days.  So they have no incentive to have a tax shelter.  They don’t need a shelter from taxes they don’t pay.

Anyway, envy of the wealthy usually works.  So the guys who want to end the 401k will use that.  They will tell us 401k’s are unfair.  Because only the wealthy benefit from them.

In addition, they say 401k plans expose innocent folks to the wickedness of the stock market.  As per the last 6 months.

By the way, I cannot imagine government would grab existing 401k assets.  They surely would grandfather them.