AUTHOR: BenefitJack on 8/16/2025 FIRST: Neil Imus on 8/17/2025 | RECENT: BenefitJack on 1/31
Comments
Hope you are enjoying the World Cup as much as the millions of foreigners are enjoying America. Thanks to you and others for your hospitality - confirming some of the best things about America, and Americans, too!
Thanks for the post. I too am a first generation American, whose mom came through Ellis Island just over 100 years ago, July 30, 2025 at the age of 7 months - in the arms of my maternal grandmother - dirt poor, they were sponsored by US relatives to make the trip from Tisinec, Slovakia alone. We still have the blanket my mom was wrapped in when they approached America on the RMS Berengaria - initially out of Hamburg Germany. Some of the descendants of family they left behind in Slovakia maintain connections, and they are in a number of European locations and a few in the states, too - including, Tisinec, as well as Bergen, Norway, Warsaw, Poland, and even Cleveland, Ohio. Last month, we reconnected with the Norway and Warsaw contingent with a trip to Oslo and Bergen, ... in additionto singing Ole Gjeilo's Sunrise Mass with an international choir. https://www.instagram.com/reels/DZm4DT7isPf/ For anyone of Norwegian descent reading this, you have a beautiful country with beautiful people. It was my privilege to visit.
Adam, others, the Trump Accounts are superior for creating wealth compared to most other options - and, you and others can ensure that outcome by pushing your employers to open Trump Accounts and add employer and pre-tax employee contributions (via cafeteria plans, where contributions garner significant tax preferences - pre-tax federal, state, FICA and FICA-Med). Your employers need to reach out to Treasury to have them issue guidance (now, in the 3rd quarter, so action can be taken in 2026) that confirms the option of using IRC 125 cafeteria plan provisions (IRC 128), provisions that appear to be similar to those that apply to Health Savings Accounts (IRC 223), that were part of the One Big Beautiful Bill. See: https://401kspecialistmag.com/trump-is-no-franklin-but/ If you don't like the name "Trump Account", nothing stops you from naming it a 530A Account, or, my suggestion - a "Ben Franklin Account". Jack
Reinstitute one time, 10 year forward averaging of a lump sum distribution. That was possible in the past, after separation, but effectively eliminated for anyone born after 1935 by changes that were part of the Tax Reform Act of 1986. The process was "simple". You must take all taxable monies from the account (this was pre-Roth, but we did have after-tax 401(a) monies), divide taxable amount by ten, calculate the tax using the single filer rate, then multiply the calculated tax by 10. Those with substantial account balances still end up with higher marginal rates, and higher average/effective tax rates. Current 2026 single filer federal tax rates: Tax Rate Taxable Income Bracket
10% $0 to $12,400
12% $12,401 to $50,400
22% $50,401 to $105,700
24% $105,701 to $201,775
32% $201,776 to $256,225
35% $256,226 to $640,600
37% Over $640,600 So, someone with retirement assets of $124,000 would pay $12,400 in income taxes. Someone with $1,000,000, would pay ~$167,118. Someone with $10,000,000, would pay ~$3,261,792 I would require all taxable monies be rolled over to a single IRA. And, I would treat it much the same as a Roth conversion (but not apply the 5 year rule when/once the individual reaches age 59 1/2). I would give individuals the option of using their assets to pay the tax (waiving the 10% penalty tax) or access plan loans equal to the federal and state withholding taxes, per the rules for qualified plans under 72(p), without the $50,000 limit, giving the individual the choice of a 5 year (general) or 15 year (home purchase) repayment period. As Dick suggested earlier, all revenue would go toward retiring national debt.
Sounds a little like CATO's Universal Savings Accounts. OK by me. 2026 Transition: Reinstitute 10 year forward averaging at 2026 single marginal tax rates so individuals must convert all accumulated tax-deferred monies from pre-tax to after-tax (401k, 403b, 457, IRA, etc.) Give workers a choice of paying the tax with a taxable distribution without penalty taxes or a tax-free loan. Rollover assets to the universal savings account. This has the effect, to some extent, of allowing everyone to go back in time as if Roth had always been the only option. Additional tax revenues in 2026 used to pay down federal debt. Going Forward: Eliminate the link to employers as plan sponsors. Limit to Universal Savings Accounts. Individuals could effectuate contributions by splitting their net paycheck. Employer's could contribute on much the same basis as they do today for Health Savings Accounts (where the account is owned by the individual and all money is 100% vested first day). Employers could contribute a nominal amount, a match, or fully fund the account. You mentioned that "... Most important is an employer match which too would remain tax-free. ..." The employer match in a 403b, 401k, 457 or Simple IRA is not tax free today! However, we do now have Roth employer contributions after SECURE 2.0, so, you would limit the employer contribution to a Roth basis. You could choose the $10,000 per person amount suggested by CATO, or perhaps you prefer the Simple IRA maximum of $17,000. No catchup. No non-discrimination. Every wage earner eligible 1st day. Every account would have regular 72(p) plan loan provisions but without the $50,000 maximum (so that the "Bank of Quinn" could be used to buy a car, a home, fund college education, regardless of employment status) - loan repayment via electronic banking. No distributions prior to age 59 1/2. Distributions after 59 1/2 are tax free, a la Roth (but without regard to any 5 year rule). Exception for death, and perhaps disability. Standard set of Designated Investment Alternatives, probably 5 or 6 or 7 index investments, coupled with a capital preservation option (money market) and access to other investments via self-directed Directed Brokerage - where the investments are not limited to those available in an 401k, but those available in any/every IRA. FYI, this is a variant of a proposal submitted in an essay contest held by the Society of Actuaries in 2010. It didn't win any prize. Note: Dick, what would you do with regard to defined benefit and defined contribution pension plans? Talk about complex.
As a volunteer assisting retired individuals with financial decision-making. I can feel their anxiety despite my repeated encouragement. I agree that fear of running out of money surfaces even among those who may never have worried in the past. One major change that is obvious to me from my personal and family experiences is that retirement is a relatively new phenomenon in America. My dad was born in 1916 and passed in 1969, at age 53. Mom was born in 1924, came to America in 1925, worked two jobs after dad died from 1970 - 1989, became disabled at age 64, lived an illness filled, mostly sedentary disability retirement, and passed in 2001, at age 76. One had no retirement, the other's "retirement" ... One reason for anxiety, the fear of running out of money among the old/retired, may arise from concerns from the exhaustion of what is often our most precious asset - the ability to earn a wage - where anxiety may arise from concerns about being unable to resume employment - whether due to ageism, physical ability, etc.
What benefits do you think young adults should pay the most attention to when choosing a job? Looking back, is there one benefit you ignored early in life that you now realize mattered more than you thought? I'm so old that my young adult years preceded 401k plans, Health Savings Accounts, PPO's, HMO's, Flexible Spending Accounts, Lifestyle Accounts, EAP's, concierge services, etc. However, I had the privilege, over the past 46 years, to manage the benefit plans for my various employers. Unfortunately for them, my two now-adult Millenial children suffered through those efforts. One "benefit" they received from my work experience was free, expert benefits counseling when they transitioned from school to wage earners. The outcome:
The oldest is on track to become a middle-class retirement savings millionaire before reaching age 50. The youngest is farther behind, having earned substantially lower wages at organizations that did not provide an employer-sponsored retirement savings plan.
Both have accumulated assets and are invested in Health Savings Accounts - because both had excellent health when entering the workforce, so, their out of pocket expenses were/are/continue to be minimal.
Neither needed life insurance at their initial hire (not married, no spouse), however the youngest has since married (no children) and has a modest amount of group term life insurance provided by her employer.
As far as I know, neither has made any benefit decision mistakes where they missed out on something valuable to them. For me? Back in 1992 (yes, 1992), I had conjured up a scheme to create a variant of what we know today as a Health Savings Account. It was unique enough such that I wouldn't proceed without asking the IRS for approval using what's called the private letter ruling process. I had investigated early Medical Savings Account concepts developed by the Golden Rule Insurance Company. My variant was closer to the predecessor of the Health FSA, what we called a ZEBRA, a zero based reimbursement account. It also had features that at times resembles today's Health Reimbursement Accounts. Today's HSA, once opened, also has some of those ZEBRA features. Unfortunately, my employer did not get out on the limb with me as I sawed furiously and refused to pursue that unique, innovative, "bleeding edge" design. One senior VP who rejected the proposal shared his thoughts widely with many other executives asserting my design was: "antithetical to small group health reform". Today, as nearly one in three workers with employer-sponsored health coverage are enrolled in HSA-capable coverage (29%) and as 43% of Americans with coverage in the public exchanges are in HSA-capable coverage, my 34 year old proposal remains in my missed opportunity personal file. That's a regret. I should have paid the fee out of my own pocket, run it through a law firm, and submitted it anyway - even though chances of IRS approval would likely have been less than 1 in 5.
In terms of access or liquidity, you could also have mentioned plan loans, how a 401k plan with loan features, "done right", can serve as the "Bank of Bogdan": Contribute pre-tax,
Defer federal/state income taxes,
Get employer match (on deferred taxes too),
Invest,
Accumulate,
Borrow to meet immediate need,
Rebalance investments to treat the plan loan principal as the fixed income investment it is, earning the plan loan interest rate,
Continue contributing while repaying the loan,
Rebuild the account for a future, greater need. Repeat as often as necessary up to and throughout retirement. Of course, individuals wouldn't borrow from the plan where there was a better source of the needed funds. To minimize distributions from loan defaults at/after separation, some plans allow for electronic banking, so that not only can payments continue after separation, but the term vested and retired participants can initiate loans. For the past 18 years, plan loans that have been repaid (and ~90% of plan loans ARE repaid) have improved BOTH retirement preparation and household wealth. Here's how:
First, almost all plan loans were deemed by the borrower to be superior to other financing alternatives, such as where the plan loan interest rate is less than the interest rate that would have applied to a loan from a commercial source, and
Second, since 2008, almost all plan loan interest rates have been 5% - 7%, which far exceeds the return on all fixed income investments in the plan. So, again, if you remember to treat the plan loan principal as the fixed income investment it is, by rebalancing your account to your target allocation after taking the loan, the plan loan will generally improve BOTH your retirement preparation and your household wealth. Certainly worked for me. See this nearly 20 year old study from the New York Fed:
https://www.federalreserve.gov/econres/feds/new-evidence-on-401k-borrowing-and-household-balance-sheets.htm
Solid. Definitely agree people should consider intervivos strategies instead of waiting until wealth becomes a legacy. You may also want to discuss with your counsel (I suspect you may already have) in terms of how the gifts will be used beyond the obvious of a 529 (if that is a prioirity for you), and, what preparations you might make for the contingencies of life and death. Consider how you/parents might communicate the gifts as the child grows. Myself, I started down this path 40+ years ago with modest gifts, set aside, to my children. I called them Ben Franklin accounts - in light of Ben's long term gifts to Boston and Philadelphia. Myself, I'd like to see employers adjust your calculus by adding Trust Account deferrals to everyone's employee benefit package. We are still waiting on guidance from Treasury. However, once issued, this can become just one more consideration where there is a "change in status" - especially the birth of a child, and perhaps even a grandchild! https://401kspecialistmag.com/trump-is-no-franklin-but/ You've given us great guidance. Thanks.
I disagree with your suggestion to simply increase the current FICA/Medicare deductions to the 16.22% level - which would place 100% of the burden on future workers and their employers. Simply, that fails to allocate any of the burden to those who have retired - people who failed to contribute enough to ensure the program is sustainable. Such a decision also locks in Congressional decisions to improve benefits in the past without corresponding increases in taxes - buying votes and sending the bill to generations too young to vote and generations unborn. What's to stop Congress from more vote buying if they pay no price for their past deceptions? It does nothing to return the program to the original intent, to keep full career workers (35 year, 420 qualifying quarter) who retire out of poverty - which would help in our goal to make the program sustainable. . Long past time to rein in Congress' vote buying schemes, so we do not end up with additional, idiotic schemes such as the Social Security Fairness Act. I never agreed with GPO and WEP, but, once they were added 43 years ago, once expectations were set, it was stupid to remove them - an action that was an obvious public employee vote buying scheme among many who had already retired.
Comments
Hope you are enjoying the World Cup as much as the millions of foreigners are enjoying America. Thanks to you and others for your hospitality - confirming some of the best things about America, and Americans, too!
Post: Happy 250th Birthday America
Link to comment from July 11, 2026
Thanks for the post. I too am a first generation American, whose mom came through Ellis Island just over 100 years ago, July 30, 2025 at the age of 7 months - in the arms of my maternal grandmother - dirt poor, they were sponsored by US relatives to make the trip from Tisinec, Slovakia alone. We still have the blanket my mom was wrapped in when they approached America on the RMS Berengaria - initially out of Hamburg Germany. Some of the descendants of family they left behind in Slovakia maintain connections, and they are in a number of European locations and a few in the states, too - including, Tisinec, as well as Bergen, Norway, Warsaw, Poland, and even Cleveland, Ohio. Last month, we reconnected with the Norway and Warsaw contingent with a trip to Oslo and Bergen, ... in additionto singing Ole Gjeilo's Sunrise Mass with an international choir. https://www.instagram.com/reels/DZm4DT7isPf/ For anyone of Norwegian descent reading this, you have a beautiful country with beautiful people. It was my privilege to visit.
Post: Happy 250th Birthday America
Link to comment from July 11, 2026
Adam, others, the Trump Accounts are superior for creating wealth compared to most other options - and, you and others can ensure that outcome by pushing your employers to open Trump Accounts and add employer and pre-tax employee contributions (via cafeteria plans, where contributions garner significant tax preferences - pre-tax federal, state, FICA and FICA-Med). Your employers need to reach out to Treasury to have them issue guidance (now, in the 3rd quarter, so action can be taken in 2026) that confirms the option of using IRC 125 cafeteria plan provisions (IRC 128), provisions that appear to be similar to those that apply to Health Savings Accounts (IRC 223), that were part of the One Big Beautiful Bill. See: https://401kspecialistmag.com/trump-is-no-franklin-but/ If you don't like the name "Trump Account", nothing stops you from naming it a 530A Account, or, my suggestion - a "Ben Franklin Account". Jack
Post: Trump Accounts
Link to comment from July 11, 2026
Reinstitute one time, 10 year forward averaging of a lump sum distribution. That was possible in the past, after separation, but effectively eliminated for anyone born after 1935 by changes that were part of the Tax Reform Act of 1986. The process was "simple". You must take all taxable monies from the account (this was pre-Roth, but we did have after-tax 401(a) monies), divide taxable amount by ten, calculate the tax using the single filer rate, then multiply the calculated tax by 10. Those with substantial account balances still end up with higher marginal rates, and higher average/effective tax rates. Current 2026 single filer federal tax rates: Tax Rate Taxable Income Bracket 10% $0 to $12,400 12% $12,401 to $50,400 22% $50,401 to $105,700 24% $105,701 to $201,775 32% $201,776 to $256,225 35% $256,226 to $640,600 37% Over $640,600 So, someone with retirement assets of $124,000 would pay $12,400 in income taxes. Someone with $1,000,000, would pay ~$167,118. Someone with $10,000,000, would pay ~$3,261,792 I would require all taxable monies be rolled over to a single IRA. And, I would treat it much the same as a Roth conversion (but not apply the 5 year rule when/once the individual reaches age 59 1/2). I would give individuals the option of using their assets to pay the tax (waiving the 10% penalty tax) or access plan loans equal to the federal and state withholding taxes, per the rules for qualified plans under 72(p), without the $50,000 limit, giving the individual the choice of a 5 year (general) or 15 year (home purchase) repayment period. As Dick suggested earlier, all revenue would go toward retiring national debt.
Post: Should Retirees Get a Temporary Flat Tax Window on IRA and 401(k) Withdrawals?
Link to comment from May 23, 2026
Sounds a little like CATO's Universal Savings Accounts. OK by me. 2026 Transition: Reinstitute 10 year forward averaging at 2026 single marginal tax rates so individuals must convert all accumulated tax-deferred monies from pre-tax to after-tax (401k, 403b, 457, IRA, etc.) Give workers a choice of paying the tax with a taxable distribution without penalty taxes or a tax-free loan. Rollover assets to the universal savings account. This has the effect, to some extent, of allowing everyone to go back in time as if Roth had always been the only option. Additional tax revenues in 2026 used to pay down federal debt. Going Forward: Eliminate the link to employers as plan sponsors. Limit to Universal Savings Accounts. Individuals could effectuate contributions by splitting their net paycheck. Employer's could contribute on much the same basis as they do today for Health Savings Accounts (where the account is owned by the individual and all money is 100% vested first day). Employers could contribute a nominal amount, a match, or fully fund the account. You mentioned that "... Most important is an employer match which too would remain tax-free. ..." The employer match in a 403b, 401k, 457 or Simple IRA is not tax free today! However, we do now have Roth employer contributions after SECURE 2.0, so, you would limit the employer contribution to a Roth basis. You could choose the $10,000 per person amount suggested by CATO, or perhaps you prefer the Simple IRA maximum of $17,000. No catchup. No non-discrimination. Every wage earner eligible 1st day. Every account would have regular 72(p) plan loan provisions but without the $50,000 maximum (so that the "Bank of Quinn" could be used to buy a car, a home, fund college education, regardless of employment status) - loan repayment via electronic banking. No distributions prior to age 59 1/2. Distributions after 59 1/2 are tax free, a la Roth (but without regard to any 5 year rule). Exception for death, and perhaps disability. Standard set of Designated Investment Alternatives, probably 5 or 6 or 7 index investments, coupled with a capital preservation option (money market) and access to other investments via self-directed Directed Brokerage - where the investments are not limited to those available in an 401k, but those available in any/every IRA. FYI, this is a variant of a proposal submitted in an essay contest held by the Society of Actuaries in 2010. It didn't win any prize. Note: Dick, what would you do with regard to defined benefit and defined contribution pension plans? Talk about complex.
Post: Time to scrap IRAs, 401k, 403b and all the rest
Link to comment from May 23, 2026
As a volunteer assisting retired individuals with financial decision-making. I can feel their anxiety despite my repeated encouragement. I agree that fear of running out of money surfaces even among those who may never have worried in the past. One major change that is obvious to me from my personal and family experiences is that retirement is a relatively new phenomenon in America. My dad was born in 1916 and passed in 1969, at age 53. Mom was born in 1924, came to America in 1925, worked two jobs after dad died from 1970 - 1989, became disabled at age 64, lived an illness filled, mostly sedentary disability retirement, and passed in 2001, at age 76. One had no retirement, the other's "retirement" ... One reason for anxiety, the fear of running out of money among the old/retired, may arise from concerns from the exhaustion of what is often our most precious asset - the ability to earn a wage - where anxiety may arise from concerns about being unable to resume employment - whether due to ageism, physical ability, etc.
Post: Deeply Rooted
Link to comment from May 23, 2026
What benefits do you think young adults should pay the most attention to when choosing a job? Looking back, is there one benefit you ignored early in life that you now realize mattered more than you thought? I'm so old that my young adult years preceded 401k plans, Health Savings Accounts, PPO's, HMO's, Flexible Spending Accounts, Lifestyle Accounts, EAP's, concierge services, etc. However, I had the privilege, over the past 46 years, to manage the benefit plans for my various employers. Unfortunately for them, my two now-adult Millenial children suffered through those efforts. One "benefit" they received from my work experience was free, expert benefits counseling when they transitioned from school to wage earners. The outcome:
- The oldest is on track to become a middle-class retirement savings millionaire before reaching age 50. The youngest is farther behind, having earned substantially lower wages at organizations that did not provide an employer-sponsored retirement savings plan.
- Both have accumulated assets and are invested in Health Savings Accounts - because both had excellent health when entering the workforce, so, their out of pocket expenses were/are/continue to be minimal.
- Neither needed life insurance at their initial hire (not married, no spouse), however the youngest has since married (no children) and has a modest amount of group term life insurance provided by her employer.
As far as I know, neither has made any benefit decision mistakes where they missed out on something valuable to them. For me? Back in 1992 (yes, 1992), I had conjured up a scheme to create a variant of what we know today as a Health Savings Account. It was unique enough such that I wouldn't proceed without asking the IRS for approval using what's called the private letter ruling process. I had investigated early Medical Savings Account concepts developed by the Golden Rule Insurance Company. My variant was closer to the predecessor of the Health FSA, what we called a ZEBRA, a zero based reimbursement account. It also had features that at times resembles today's Health Reimbursement Accounts. Today's HSA, once opened, also has some of those ZEBRA features. Unfortunately, my employer did not get out on the limb with me as I sawed furiously and refused to pursue that unique, innovative, "bleeding edge" design. One senior VP who rejected the proposal shared his thoughts widely with many other executives asserting my design was: "antithetical to small group health reform". Today, as nearly one in three workers with employer-sponsored health coverage are enrolled in HSA-capable coverage (29%) and as 43% of Americans with coverage in the public exchanges are in HSA-capable coverage, my 34 year old proposal remains in my missed opportunity personal file. That's a regret. I should have paid the fee out of my own pocket, run it through a law firm, and submitted it anyway - even though chances of IRS approval would likely have been less than 1 in 5.Post: Benefits Young Adults Should Look at Before Taking a Job
Link to comment from May 16, 2026
In terms of access or liquidity, you could also have mentioned plan loans, how a 401k plan with loan features, "done right", can serve as the "Bank of Bogdan": Contribute pre-tax, Defer federal/state income taxes, Get employer match (on deferred taxes too), Invest, Accumulate, Borrow to meet immediate need, Rebalance investments to treat the plan loan principal as the fixed income investment it is, earning the plan loan interest rate, Continue contributing while repaying the loan, Rebuild the account for a future, greater need. Repeat as often as necessary up to and throughout retirement. Of course, individuals wouldn't borrow from the plan where there was a better source of the needed funds. To minimize distributions from loan defaults at/after separation, some plans allow for electronic banking, so that not only can payments continue after separation, but the term vested and retired participants can initiate loans. For the past 18 years, plan loans that have been repaid (and ~90% of plan loans ARE repaid) have improved BOTH retirement preparation and household wealth. Here's how: First, almost all plan loans were deemed by the borrower to be superior to other financing alternatives, such as where the plan loan interest rate is less than the interest rate that would have applied to a loan from a commercial source, and Second, since 2008, almost all plan loan interest rates have been 5% - 7%, which far exceeds the return on all fixed income investments in the plan. So, again, if you remember to treat the plan loan principal as the fixed income investment it is, by rebalancing your account to your target allocation after taking the loan, the plan loan will generally improve BOTH your retirement preparation and your household wealth. Certainly worked for me. See this nearly 20 year old study from the New York Fed: https://www.federalreserve.gov/econres/feds/new-evidence-on-401k-borrowing-and-household-balance-sheets.htm
Post: Retirement Accounts
Link to comment from May 16, 2026
Solid. Definitely agree people should consider intervivos strategies instead of waiting until wealth becomes a legacy. You may also want to discuss with your counsel (I suspect you may already have) in terms of how the gifts will be used beyond the obvious of a 529 (if that is a prioirity for you), and, what preparations you might make for the contingencies of life and death. Consider how you/parents might communicate the gifts as the child grows. Myself, I started down this path 40+ years ago with modest gifts, set aside, to my children. I called them Ben Franklin accounts - in light of Ben's long term gifts to Boston and Philadelphia. Myself, I'd like to see employers adjust your calculus by adding Trust Account deferrals to everyone's employee benefit package. We are still waiting on guidance from Treasury. However, once issued, this can become just one more consideration where there is a "change in status" - especially the birth of a child, and perhaps even a grandchild! https://401kspecialistmag.com/trump-is-no-franklin-but/ You've given us great guidance. Thanks.
Post: Saving for Grandchildren
Link to comment from May 2, 2026
I disagree with your suggestion to simply increase the current FICA/Medicare deductions to the 16.22% level - which would place 100% of the burden on future workers and their employers. Simply, that fails to allocate any of the burden to those who have retired - people who failed to contribute enough to ensure the program is sustainable. Such a decision also locks in Congressional decisions to improve benefits in the past without corresponding increases in taxes - buying votes and sending the bill to generations too young to vote and generations unborn. What's to stop Congress from more vote buying if they pay no price for their past deceptions? It does nothing to return the program to the original intent, to keep full career workers (35 year, 420 qualifying quarter) who retire out of poverty - which would help in our goal to make the program sustainable. . Long past time to rein in Congress' vote buying schemes, so we do not end up with additional, idiotic schemes such as the Social Security Fairness Act. I never agreed with GPO and WEP, but, once they were added 43 years ago, once expectations were set, it was stupid to remove them - an action that was an obvious public employee vote buying scheme among many who had already retired.
Post: Fixing Social Security once and for all
Link to comment from April 22, 2026