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From: hansen@mips.UUCP
Newsgroups: net.taxes,net.invest
Subject: Re: New penalty on 401k plan withdrawals
Message-ID: <656@mips.UUCP>
Date: Thu, 4-Sep-86 21:15:06 EDT
Article-I.D.: mips.656
Posted: Thu Sep  4 21:15:06 1986
Date-Received: Sat, 6-Sep-86 02:08:25 EDT
References: <2fc05008.2a75@apollo.uucp > <3095@teddy.UUCP>
Organization: MIPS Computer Systems, Sunnyvale, CA
Lines: 42
Xref: mnetor net.taxes:566 net.invest:1176

> I disagree. The 401k cannot be considered a rich mans tax shelter (especially
> now that its going to be limited to 7k/year.)  I feel that the gov't is 
> renigging on old promises (why doesn't this surprise me :-) ).
>
> The 401k was advertised as a means of reducing your taxable income WITH 
> the extra eye-catcher that you would be able to remove the $$ from the 
> 401k for financial difficulties (eg. Buying a house, college expenses, ...).
>
> For those of you who invested your money for any of these reasons, you
> are now taking it in the rear from old Uncle Sammy.

All the information that I saw when considering a 401k plan (principally
that produced by the company offering it) clearly stated that the Gummint
was considering legislation that would limit or eliminate the ability to
remove the money for "financial difficulties."  (I used quotation marks here
because buying a house and college expenses are totally forseeable events,
not some unexpected difficulty.)

Further, the permissible contribution was limited to less than $7k per year
by restrictions that were intended to ensure that the 401k plan was not used
only by the wealthy members of the company.

Finally, 401k money automatically pops loose even upon voluntary resignation
so unless you're going to stick with the same company for the rest of your
life, you can get it back sooner of later anyhow.

In any case, the 401k plan is hardly equitable, as it is not available
to those working in companies or small business that aren't equipped
to offer it. The administrative costs are prohibitive for a small company,
but it doesn't take too much guessing to figure out where the "political
action" came from to put in onto the books.

So if you guys are gonna cry to Uncle about your pet deductions, how about
shedding a tear for the more-than-doubled taxes on capital gains?

Craig Hansen
MIPS Computer Systems
-- 

Craig Hansen			|	 "Evahthun' tastes
MIPS Computer Systems		|	 bettah when it
...decwrl!mips!hansen		|	 sits on a RISC"