Just last night I was talking to an engineer who couldn't understand the complexity of retirement and savings plans and wondered why the government just didn't make it easier to save.
He's not the only one. The Wall St. Journal reports today that the President, his tax-reform commission, some Congressmen and a "bevy of economists and tax experts think so too. A New Approach to Savings Plans (subscription only) reports that support is growing for boiling all the various plans into three simpler ones.
A Save at Work account to replace 401(k)s and other employer-sponsored retirement plans that would allow workers to set aside $14,000 in pre-tax wages for retirement.
A Save for Retirement account to replace IRAs and deferred compensation accounts allowing taxpayers to set aside an additional $10,000 after taxes annually.
A Save for Family account would replace college saving, health care and flexible-spending accounts and allow a taxpayer to put aside an additional $10,000 after taxes annually.
Makes sense to me.
Posted by Jill Fallon at December 1, 2005 2:52 PM | PermalinkThe Save for Family idea - in and of itself - is fine, but I have a problem with the numbers. Right now, a family of four (2 kids) can sock away $22K annually in 529 plans ($11K for each child), $2K per child in education savings accounts and them plop a few thousand into a health savings account. So they want to take the ability to save something on the order of $30,000 per year (more if you have more than 2 kids) and replace it with $10,000? Doesn't make sense to me.
Posted by: D'Lover at December 2, 2005 2:01 PM