401K rules are changing
Posted: Sat Dec 21, 2019 8:12 am
https://www.wsj.com/articles/significan ... 1576843201
Oddly, it was hard to get specifics from these articles, but I gathered that there are two provisions that are relevant for this board:
- After 2019, RMDs start at age 72.5, rather than 70.5.
- The age 70.5 limit for contributing to a tax-advantaged account is repealed.
There is also some form of "encouragement" for 401K plans to offer annuities. I'd really like to know who bribed whom on this one. Without any provision for a government guarantee, or some sort of insurance requirement in case the annuity fund collapses or the company goes under, this is potentially dangerous. Also, why is this needed? The average John Q Investor who doesn't want to manage their portfolio can just go with target date funds. Those can be turned into annuities later if desired. Paying annuity fees throughout the accumulation years is just a way to drain yet more fees from investors. Also, how is this going to solve the problem of John Q Investor not saving enough, which is the real issue here?
Oddly, it was hard to get specifics from these articles, but I gathered that there are two provisions that are relevant for this board:
- After 2019, RMDs start at age 72.5, rather than 70.5.
- The age 70.5 limit for contributing to a tax-advantaged account is repealed.
There is also some form of "encouragement" for 401K plans to offer annuities. I'd really like to know who bribed whom on this one. Without any provision for a government guarantee, or some sort of insurance requirement in case the annuity fund collapses or the company goes under, this is potentially dangerous. Also, why is this needed? The average John Q Investor who doesn't want to manage their portfolio can just go with target date funds. Those can be turned into annuities later if desired. Paying annuity fees throughout the accumulation years is just a way to drain yet more fees from investors. Also, how is this going to solve the problem of John Q Investor not saving enough, which is the real issue here?