3Million cap on 401K

[simplepeddler]

With the administration exploring a "cap" of 3 million on a 401K or retirement account.......how many you people will this affect?

I know back in the day guys where getting there.......
But is it reasonable that a guy can get there, to 3 million, in today's time?

[Reggoh]

We were discussing this at work the other day... what happens to the money once you reach $3M?? Is this a cap on contributions or total account value? I don't think it is feasible to contribute that much so it must be on total account value... once again.. what if you have $2.99M and some of your investments rise... are you required to remove the portion of the money over the cap? Are you still penalized if you are not of age? Lots of questions about this one.

["W"]

Originally Posted by simplepeddler

With the administration exploring a "cap" of 3 million on a 401K or retirement account.......how many you people will this affect?

I know back in the day guys where getting there.......
But is it reasonable that a guy can get there, to 3 million, in today's time?

Im sure it's in reach of some long term employees. I guess it would have to do a lot on how you are invested???

I know when I started my 401K back in 2000 it seemed like it took forever to grow. Once you reach a 6 figure number your rate of growth picks up 2xs faster vs 5 figures (This is in my case for sure)


I'm sure you could figure an overall growth % per year and run numbers for 30 years..

I place 9% in my 4o1 and company matches 6% of that

But I'm not going to hit 3 Million in 30 years... unless the Market booms with some stupid numbers

[Armand16]

Originally Posted by Reggoh

We were discussing this at work the other day... what happens to the money once you reach $3M?? Is this a cap on contributions or total account value? I don't think it is feasible to contribute that much so it must be on total account value... once again.. what if you have $2.99M and some of your investments rise... are you required to remove the portion of the money over the cap? Are you still penalized if you are not of age? Lots of questions about this one.

You wouldnt have to move it, you would just have to pay annual taxes on earnings excess of 3m and would have to start contributing to a brokerage outside of an IRA.

[simplepeddler]

Originally Posted by Armand16

You wouldnt have to move it, you would just have to pay annual taxes on earnings excess of 3m and would have to start contributing to a brokerage outside of an IRA.

That's part of my understanding as well...........not so much "penalties" as much as taxes......

[swamp snorkler]

I'd love to have that problem

[bmac]

Yeah I'm not gonna have to waste any time thinking about this problem.

[Reggoh]

Another question... If they put an overall cap on the 401k would this have any impact on the yearly cap and catch up contribution caps?

[simplepeddler]

I don't think so, it will only be after you reach that amount and from what is speculated now, it will be a "forced" withdrawal?????

I think like most crap these fools do, they have no idea how it's really going to work out.
It's like a bunch of college kids considering a "universe" under thier fingernail after drinking too much mushroom tea............(not that I have ANY personal experience in such drink)