Treasury official favors government “match” for savings
For folks fortunate to have an employer match in their 401k plan, failing to contribute would be like passing up free money. That’s a powerful incentive to save. Now, some officials in Washington want more people to have that incentive — but, instead of coming from your employer, the savings match of the future might come from Uncle Sam.
This program already exists in a modest way. The Saver’s Credit rewards low-income taxpayers — single people earning less than $26,500 and married couples earning less than $53,000 — who contribute to an IRA, 401k or other retirement plan. The credit can be for up to $1,000 a year, and for the very lowest earners it can equal 50 percent of the amount they put into savings. For others, it’s as little as 10 percent.
Mark Iwry, deputy assistant Treasury secretary for retirement and health policy, wants to expand the Saver’s Credit so that everybody who’s eligible gets a 50 percent match. And he’d like to make the credit refundable, like the Earned Income Credit, so that it benefits people who don’t owe any income tax. The current credit, because it’s nonrefundable, provides no benefit to most people with very low incomes.
Current retirement tax breaks provide the most benefit to people in the highest tax breaks, so the Saver’s Credit also has a fairness argument going for it. Iwry said the philosophy behind the proposal is simple:
Let’s reward people based on how much of the desired behavior they engage in rather than how high their income is.
Ideally, if administrative hurdles can be overcome, the credit would be deposited into a taxpayer’s retirement account rather than being sent out in a tax-refund check. That would make it seem even more like a savings match from Uncle Sam.
The expanded Saver’s Credit isn’t written into any proposed legislation at the moment, but it would seem to have a chance of attracting bipartisan support. “I like that type of approach” was the response of Rep. Cathy McMorris Rodgers of Washington state, a Republican member of the House Education and Labor Committee.
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David Nicklaus has covered St. Louis business for more than 25 years. His column appears three days a week on the Post-Dispatch business page. 
O.K. Great, now how do we pay for it?
Where in the heck is all of this flippin’ money coming from?
So we are going to get taxed so they can turn around and out it rightback into our savings account (minus Uncle Sams cut of course)? When are people going to realize the government is trying to run their whole lives…just say no!
Since we spend a couple billion a month in Iraq and just spent $700 billion to bail out Wall Steet, I say it’s time to spend some money on regular American citizens. Where is that $700 billion coming from, anyway?
C, I guess public road improvements, parks, museums, welfare programs, the protection the military provides for our nation, the Coast Guard, the FDA, the Center for Disease Control, the Corps of Engineer levees, etc don’t count as money spent on regular Americans, eh?
You are part of the problem. This “where’s mine” attitude is what got us in this spending mess in the first place. Try telling the government instead to leave your money alone so that you can decide what you want to do with it. Letting someone else do your thinking, saving, planning, etc for you is a BAD habit to get into…
Well I hope everyone sees the reason for doing this. As always, follow the money.
Example.
I contribute $100 to 401k now. This comes out before taxes so my taxable income is actually reduced. This is decreased govt tax revenue now.
Govt now matches up to 50% so I could actually reduce my before tax contribution by $33.33. This is now extra money in my take home pay which is taxable so it provides tax revenue for govt NOW. The total amount of my contribution plus govt match still equals $100 however.
(x + .50x = $100 therefore x = $66.67)
Govt gets future tax revenue when I retire and start taking money out of my 401K. Tax revenue for govt then.
Personally I like things the way they are. Stop screwing around w/ things. Where does the money come from to pay contribution? Tax increases?
BTW, look for someone to propose taxing Roth IRA distributions. Not only the earnings, but the contributions as well when you start withdrawing.
I’d also like to know where this money is going to come from. It seems the government never has a problem spending money they don’t have on things we don’t need. Same ole, same ole. How about just cutting tax rates across the board to give money back to the people. Then cut spending to be inline with your incoming revenues. Just like all us normal people do.
Great, another program that helps the folks on the bottom. Seems this administration helps its friends at the top (Wall Street and the banks) and those at the bottom (in this case singles earning less than $26,500/yr) and leaves those of us in the middle to foot the bill through higher taxes (the only way to pay for all the spending being done plus coming health care “reform”) and higher interest rates (which will result when our national debt rises and the country’s credit rating is decreased).