Quote:
Originally posted by Mmmm, Burger (C.J.)
Fair points, but I'm not really trying to address the precise question of saving SS through increasing 401ks. That said, the SS deficits will almost certainly have to be funded through ordinary income tax revenues, if for no other reason than to pay the IOUs. Good timing if retirees are wihdrawing from their 401ks
As for passing along--the taxes get paid eventually. First, IRAs have mandatory withdrawals (as do 401ks, no?), so you have to pay the taxes at 70+. If you pass to the kids, they still have to withdraw. And if you convert to a Roth in the meantime, you have to pay taxes then. All they provide for is tax deferral, not tax avoidance.
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I was responding to your comment "It increases future tax revenues, however, fortuitously at the time that SS will be in most dire straits" which does seem to be you addressing the question of savings SS through increasing 401ks.
My point about passing down to the kiddies was not in the context of the current system, it was in the context of your idealized consumption tax-based system. If there's only a consumption tax, the withdrawals wouldn't be taxed unless spent. But, in case you were wondering, there are mandatory annual withdrawals for 401(k)s (and other emploeyr plans) at the later of when you terminate or reach age 70.5. And distributions under the current system are taxable if they go to non-spousal beneficiaries.
