With a new administration in the White House, tax legislation will certainly be on the plate. As we know with the last tax bill, great tax deductions and subsidies could be on the chopping block to pay for tax cuts. We say that the cap on state and local taxation deductions at $10,000, was the stick to get tax cuts.
401(k) deferrals cost the Federal government about $185-200 billion in lost revenue. Critics claim this tax deferral is a boon to the wealthy. So expect a few in Congress who will want to eliminate this benefit or require all contributions to be made on a Roth, after-tax basis. Regardless, we need to be vigilant in preserving this benefit, which preserves us as plan providers in this industry.
