I've been mostly unimpressed with Biden's campaign platform, dedicating my support to him almost solely because he's not Donald Trump. However, I read something about a proposal of his that I really like, and that is a change in the 401K rules that would eliminate the clause allowing for 401K contributions to reduce earned income and convert it into a tax credit. The effect of a tax credit would be that it would be more of a benefit to lower income earners as the tax savings in the lower brackets isn't as great as it is in the higher ones:
...they (income reduction incentive) give the biggest reward to high earners. If a single earner in the top income-tax bracket contributes $1,000, he saves $370 in taxes. For a single earner in the 12% tax bracket, that $1,000 deduction is worth only $120.
The Biden proposal restructures the incentive by replacing the deduction with a tax credit, which is estimated to be 26%. Thus, low-wage workers would be rewarded more than under current law and those in the top brackets somewhat less. And the credit would be refundable so that even workers with no tax liability would benefit from putting $1,000 into a 401(k) plan.
The Biden website says almost all workers without a retirement plan will have access to an automatic 401(k).
https://www.marketwatch.com/story/biden ... =home-page
This is a fantastic idea. I am a huge supporter of 401K's and have advocated increasing their use for years. I used them to build my retirement nest egg and did so on relatively modest earnings. With Social Security becoming more and more unreliable, it's essential that younger workers save for their retirement. It also helps the little guy.
Additionally, employers need to get away from pensions and start converting them to 401K's, which offer advantages over pensions for both the worker and the employer. The individual has more control over their 401K fund whereas there is zero control on pension investments, plus they are portable and can travel with the employee if they change jobs. Pension accounts stay with the employer.
For the employer, they do not owe 401K money to ex employees as they do with pensions. Many older, established companies are now burdened with legacy costs that their newer competitors aren't saddled with.