The 401(k) has been responsible for an estimated $15 trillion in savings.
Now, however, the man who created the first 401(k) savings plan back in 1981 believes the 401(k)… along with other retirement accounts like IRAs, 403(b)s and 457s… may be in danger.
Ted Benna recently spoke out about the similarities he sees between President Trump’s and Reagan’s administrations. Especially when it comes to tax reform.
“Change, reform is fine,” says Benna. “But you’ve got to realize that change comes at a cost.”
Benna notes that, while he admires the changes Reagan made to income taxes—lowering the top rate from 70% down to 28%—the 401(k) almost disappeared under “the Gipper’s” presidency.
“At first, it used to be you could put away over $45,000 each year tax deferred [in 401(k)s]. Then, in 1982, it got lowered to $30,000. But then in 1986 it dropped all the way down to $7,000.”
The reason for the drop or “repeal” is simple.
By lowering the amount of money people could defer tax-free each year, the government was able to tax more money. So it acted kind of like a “back-door” revenue grab.
With todays’ talk of tax reform, there’s already been serious talk of doing something similar again.
One proposal, involving Gary Cohn, the director of the White House’s National Economic Council and several members of Congress, would have all retirement plans going to “Roth like” status.
That means we would no longer be able to defer money pre-tax anymore, but we could still put money in “after tax”… after the government gets their cut.
What is Benna doing to protect his money?
He’s already put the biggest past of his money in more “off-the-grid” investments he believes the government is much less likely to touch.
One involves an account several Presidents and Congressmen have used to grow their savings up to 45 times faster than in banks… and another offers guaranteed monthly income (President Reagan used this one himself to collect over $75,000 per month).
“Many of (these investments) survived Reagan’s tax reform untouched,” says Benna. “That’s why I believe they’re much less likely to get targeted than, say, 401(k)s, IRAs, or even Roth accounts.”
To get access to Ted Benna’s full interview, as well as the details about where he now has his money, click here.