AUTHOR: BenefitJack on 8/16/2025 FIRST: Neil Imus on 8/17/2025 | RECENT: BenefitJack on 1/31
Comments
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.
Unfortunately, I don't think so. The compexity seems to be needed in order to accomplish all three goals:
(1) A change prior to 2032,
(2) Promise/guarantee to make the system indefinitely sustainable, and
(3) Return Social Security to its original goal of avoiding poverty in old age. Would be happy to discuss simpler solutions - just don't know any. In fact, my own preferred solution is even more complex. The Trump "Savior" solution (identified above) is simplest and easiest to implement - as the D's will very much enjoy pinning BOTH the benefit cuts and the tax increases on Trump.
My proposed $100,000 cap on FICA wages for benefit calculation purposes may have a greater effect in improving funding than the CRFB's proposal to cap household Social Security benefits at $100,000 a year. Their proposal would leave the FICA wage base provisions unchanged, shifting the program into more of a welfare arrangement - disconnecting wages for tax purposes from wages for benefit calculation purposes. CRFB asserts that their proposal would close 55% of the 75 year funding shortfall. https://www.crfb.org/sixfigurelimit
I have my own ideas regarding Social Security reform - but because they require everyone to participate in the solution, including current retirees, either to pay more taxes or take less in benefits, I doubt anyone would ever approve such changes. Trump Recommendation With respect to an action the Trump Administration might take, here is what I think he should do. Once the Republican nominee for president is known, on or about September 1 2028, Trump could issue one of his infamous edicts and direct the Republicans in the Senate to filibuster the 2029 budget (upon threat of a veto) unless it included his Social Security "fix" - that would have four components:
A cap on FICA wages of $100,000, applied prospectively starting January 1, 2030,
A cap on earnings used in the benefit calculation of $100,000 per year, applied to all who commence Social Security benefits on or after January 1, 2030,
For all who commenced payout prior to January 1, 2030, effective January 1, 2030, recalculate their Social Security benefit as if the $100,000 FICA wage base applied in years prior to 2030 and suspend COLA increases on or after January 1, 2030 until such time as the recalculated monthly benefit includes the $100,000 wage base, and
A 4% increase (from 6.2% to 10.2%) in the EMPLOYER contribution to Social Security effective January 1, 2030 (total 16.4%).
So, instead of an employer contribution of $3,100 for someone with $50,000 of earnings in 2030 or $6,200 for someone with $100,000 in FICA wages in 2030, the new amounts would be $5,100, $10,200. Those who have been paying FICA taxes on income > $100,000, every year since 2008, would have their benefits limited in the benefits calculation - for all who commence after January 1, 2030, and gradually, for all who commenced prior to January 1, 2030. For most workers, the increase in taxes would be indirect, likely in the form of reduced wage increases in 2030 and 2031. For higher paid workers, they would see net pay increase (while Social Security benefits would decline). For retired higher paid workers, their Social Security benefits would be frozen for a period of time - shortest for those who only infrequently had FICA wages in excess of the wage base. Trump would be able to claim he saved Social Security for all future generations (and just in time for the 2028 General election), while everyone else, especially Democrats would be able to blame him for increased FICA taxes, a la George H. W. Bush “read my lips no new taxes.” ... while Trump will leave office January 20, 2029 before the new taxes take effect. A la Shakespeare: "The evil that men do lives after them; The good is oft interred with their bones. So let it be with 'Trump'." That would return Social Security, over the next few decades, to a program designed to minimize poverty in old age. Or, if we do another iteration similar to the 1983 changes: I would temporarily raise the tax rate in 2032 (creating a specific link between new taxes and benefit payments, confirming that we failed to properly fund the trust and that trust assets have been exhausted) so that inadequate revenue did not require a benefit cut - spread equally between worker and employer. The "surtax" would be recalculated every year and announced in November. To match life expectancy, I would change the Normal Retirement Age from 67 to 70. Here is how: To change the Normal Retirement Age, 67 for people born after 1960, I would add three months per year, starting in 2028 (67 and 3 months for people born in 1961), and three months for every subsequent year until fully phased in of age 70 for those born in 1972. I would also change the benefit formula to reflect the higher "normal" retirement age of 70, anticipating more years with wages. I would gradually change the number of years of earnings in the denominator from 35 to 50. Here is how. I would add one year to the denominator of the benefit calculation for each year starting in 2028, for 15 years, fully phased in at 50 years in 2042. And, I would extend the 8% per year bump for delaying commencement from age 70 to age 75, so, an individual who would receive $1,000 a month at age 70 could delay and commence at 75 in the amount of $1,470. And, to sell it, I would highlight just how little the worker paid in FICA taxes (relative to the benefits received). For all who retire in the future, I would change the taxation so that a worker receives his/her contributions, dollar for dollar, or penny for penny, tax free first. Then, once the employee contributions had been "refunded" (exhausted), I would confirm that and then take the same action regarding the employer contribution, taxable (as if it were a pension). And, then, once every dollar paid in on the worker’s behalf has been received (exhausted), the worker would receive a confirmation of that fact, and, that they are now being funded by other people’s contributions or earnings on trust assets.
Thanks Adam. In my 31 years of benefits experience in Human Resources, I worked on over 50 different acquisition and divestiture transactions. Too many times, us benefits weenies were not included in the analysis, discussion and offer process until long after momentum for a deal had metasticized. we took a bath in red ink. Here is an example. During the due diligence phase, after having only a day to look at the material, I was discussing the transaction with my ERISA legal counsel, on my way back from a visit to a field office. As I wound my way through the Appalacian hills/mountains on Interstate 64, I lost cell phone service once. After telling counsel I would stop and complete the discussion from a pay phone if I lost cell phone service, I lost it again. Five minutes later, I pulled into a stop for gas and another 5 minutes later I called from a pay phone. My legal counsel told me to forget it, because during the break he had called the deal makers and they had caved on every one of the seller's benefits demand - most of which was expensive, unnecessary and injurious crap (a separate payroll cycle, an early retirement window, a unique severance and retention program, etc.) My little part of the world was comparatively small potatoes in the M&A space. But, too often, years later, we had to resolve stupid promises and commitments that were obviously affected by the "winner's curse" and/or “the hubris hypothesis.” only to become a drag on post-transaction financial results.
I was let go as a COVID casualty in 2021 after a decision was made to discontinue the initiative I was transferred to in 2019. Wasn't done perfectly. Clearly, I could have done a better job preparing. After the transfer to a new position in a brand new unit, the writing was on the wall. I chose to stay, but my trust in the organization wasn't matched. That was a surprise, and disappointing. In particular, on the phone call where I was advised my employment ended that day (I was working mostly remotely), I didn't appreciate a suggestion from HR that my involuntary separation would be communicated and recorded as a "retirement". Obviously, they misunderstood how unemployment compensation works (or they didn't care). However, I have been on the other side of what I used to call "economic capital punishment" - having to explain how the organization's benefits function after separation. I did my best to guide individuals in all of the options and value possible - even after separation - specifically highlighting that benefits, when subject to ERISA (such as your DB pension, your 401k, even your health plan) are themselves legal entities separate from your former employer. More than once I saw the light come on among distressed workers on how their current decision-making could still improve the value obtained from their benefits. One prior comment I agreed with is preparation, being honest with workers about business conditions. For me, "being decent" isn't limited to the severance package, but is better achieved by "being honest" about the sustainability of the business, and employment.
I've been a proponent of HSA-capable coverage since passage of the 2003 legislation and a HSA owner since 1/1/05. Our HSA accounts (myself and my spouse) now exceed $250,000. We transitioned almost all employees with health coverage at my Fortune 100 employer to HSA-capable coverage during the period 2005 - 2011. Some thoughts to comments previously made (my comments are numbered and in italics): "HEALTH SAVINGS ACCOUNT (HSA) is the most efficient tax-advantaged investment account because it offers a triple tax advantage." (1) Actually, once individuals have saved whatever was necessary to obtain the employer financial support for their 401k and HSA, the next dollar would almost always be better invested in the HSA, before the 401k."HSAs have been around since 2004. The (false) idea was they would help employees become better health care consumers if they were spending their own money." (2) Actually, the most important factor in offering HSA-capable coverage is to offer workers an option where they can avoid overinsurance - paying too much in contributions for coverage they don't need. According to Commonwealth studies, the average out of pocket spend of Americans under age 65 depends on the type of coverage you have: ~$682 for private insurance, ~$725 for uninsured, and ~$253 for public coverage. About 1 in 20 adults under 65 spend over $1,700, while 1 in 100 spend over $5,000 annually. However, the median out of pocket spend is < $250 for all Americans under age 65! So, the money not spent on premiums (contributions) for coverage that is far in excess of what they need, can be saved on a tax preferred basis in the HSA. "Yes, with a HDHP the premiums are lower, but even if those premium savings were all placed the the HSA, it’s not enough to cover the out of pocket risk in many cases." (3) In terms of health care costs, HSA-capable coverage doesn't work unless you actually fund the account. However, for 80+% of workers and their spouses and children under age 65, those who are incurring less than $500 a year in health care expenses, the HSA is almost always the better health coverage choice, accumulating assets for a future when their out of pocket expenses are all but certain to be higher - if only because of Medicare premiums. "I keep $500 (the minimum required balance) in cash. The rest, I invest in low-cost index funds. This allows me to maximize compounding inside the HSA account. ... I will also not touch my HSA at all, even if I have medical expenses. I will reimburse myself 20-30 years down the road (more on this in a bit)." (4) The better option is to invest 100% of the HSA assets in something other than capital preservation, taking any medical spending receipts and putting them in a "shoebox", allowing the assets to accumulate tax deferred, and ultimately provide reimbursement tax free. Your current day payment of medical expenses with after-tax dollars becomes a unique tax-preferred investment. "I also receive a $1,000 HSA match." (5) Most company contributions to HSAs are in the form of a non-elective contribution in order to pass discrimination tests. The better solution for most employers would be to establish the company contribution as a matching contribution, to provide an incentive for individuals to save in their HSA. I recommend you consider using the same method/formula that you already have in place in your 401k plan. "To contribute to a HSA, three things must happen: You need a high deductible health plan (HDHP)." (6) Stop calling it a High Deductible Health Plan. We no longer call the 401k by its original name: a "salary reduction savings plan". And, keep in mind that the $1,700 minimum deductible for HSA-capable coverage is actually LESS THAN the average deductible shown in the 2025 Kaiser survey of employer-sponsored coverage. "Importantly, the HSA balance never expires. This account is always yours to keep, even if you leave your employer." (7) The HSA is much the same as an IRA. With few exceptions, the HSA is not subject to ERISA. You are the owner. Ensure you name a beneficiary - just as you would for an IRA. Available investments for a HSA are much the same as those for an IRA. "If your employer allows it, contributing to an HSA via payroll deduction is generally better than contributing directly, as it avoids the 7.65% FICA (Social Security and Medicare) taxes. Direct, after-tax contributions only save on income tax when filing, missing the payroll tax savings." (8) Of course, you should encourage your employer to add HSA contributions to their cafeteria plan - so that the employer can also avoid FICA and FICA-Med taxes on your contributions. Keep in mind that whether you contribute via your employer's cafeteria plan or by taking an above the line tax deduction when filing your tax return, your contributions also generally avoid most state income taxes. "Withdrawals for medical expenses are tax-free. IRS Publication 502 has information about which expenses qualify as medical expenses." (9) The HSA is not only the benefit that offers Americans the greatest tax preference, it is also the benefit that offers Americans the greatest utility: (a) Eligible expenses today include medical, dental, vision, hearing, Rx, and Long Term Care (LTC) out of pocket expenses, COBRA premium, and certain LTC insurance premiums, (b) Eligible expenses in retirement include all of the above plus Medicare Part A, Part B, Part D and IRMAA premiums, as well as any premiums you pay for employer-sponsored retiree medical coverage, (c) Penalty tax free distributions after age 65 to provide income in retirement, and (d) Survivor benefits, tax preferred reimbursement for medical expenses and premiums for a surviving spouse or other tax dependent, a taxable benefit to other beneficiaries for any residual. The claims clock starts, and eligible expenses include all of those incurred after you open your HSA, REGARDLESS of when you contribute to the HSA. In that way, it is akin to an old benefit concept, what was once known as a ZEBRA. "Once the accumulated funds are exhausted the HSA is useless until the fund is replenished." (10) Generally speaking, this is a misleading statement. Almost all employer-sponsored coverage has a deductible today. The annual Kaiser survey shows that 88% percent of workers with coverage have a general annual deductible that must be met before most services are paid for by the plan and that the average deductible amount in 2025 was $1,886. The average deductible for PPOs was $1,337.So, for example, where a HSA-capable coverage option is offered alongside a traditional PPO, say the HSA-capable coverage and the PPO have the same out of pocket expense maximum, and that the PPO has a deductible of $1,337 and the HSA-capable option has a deductible of $1,700, the participant's focus in deciding which coverage to select should be on the difference in deductibles, here $363 plus any medical expenses (typically Rx) that are not subject to the deductible, but typically have a copay. Most employer sponsored plan communications, such as the Summary of Benefits and Coverage INTENTIONALLY OR UNINTENTIONALLY mislead workers when they are comparing coverage options because they fail to tell the whole story - both point of purchase and point of enrollment cost sharing as well as all employer financial support.
IRC 530A accounts may succeed at creating middle class millionaires ... someday. The average annual rate of return since the end of WWII has been about 11.17% per year. Investing $1,000 at birth today in a tax deferred account @ 11.17%, results in an account worth slightly more than $2.5 million at required minimum distribution age 75. People who have children are, by definition optimists. My understanding is:
The child is the owner of the account,
At age 18, the child would be able to convert the assets to a Roth basis - so that distributions may someday be tax free, and so RMD would not apply,
A child born during 2025 - 2028 can obtain the $1,000 from the Treasury,
If parents can't fund the account, nothing wrong with asking employers, or grandparents or other relatives,
They used to call the 401k a "salary reduction savings plan", you can call the account anything you want, including a 530A Account!
Don't leave your child behind ... just in case history repeats itself.
Just a short update. Not only will you want to investigate this opportunity. You will also want to prompt your employer to consider adding Trump Accounts to your cafeteria plan. Effectively, this treats your child's Trump Account on much the same basis as a Health Savings Account, in terms of the option to use such savings as income in retirement (after age 65). Money goes in pre-tax for Fed, State, FICA, FICA-Med, accumulates tax deferred, and while it is taxable as ordinary income after age 65, ... the tax preferences are significant. Because they are pre-tax for FICA and FICA-Med, it also provides a modest financial incentive for the employer to add this feature to their cafeteria plan. Even if you are not interested, you can do your coworkers a favor by pitching this to your employer. https://401kspecialistmag.com/trump-is-no-franklin-but/ https://401kspecialistmag.com/let-ben-franklin-create-middle-class-millionaires-eradicate-poverty-in-america/ America is 250 years old. Embrace the commitment of Ben Franklin, invest in America's future - our children, grandchildren. Let's go!
Lots to consider. Typically, a rollover/direct transfer decision is a once in a lifetime decision (for monies in that plan), so, it is typically worth your while to investigate fully, and to have a trusted advisor (not the IRA vendor) review. ERISA protections go beyond bankruptcy. Your employer-sponsored plans are separate legal entities - not part of the union nor the plan sponsor. The fiduciary protections in a plan subject to ERISA are better than IRAs. Further, if your employer sponsored plan is like mine, where there are billions in assets and tens of thousands of participants, including thousands like me who no longer work there, we are all watching the plan sponsor and plan fiduciaries. Lots of litigation out there where plan fiduciaries make mistakes. When you ask about consolidation, I assume you are asking about a rollover or a direct transfer to an IRA or to another employer sponsored plan, right? If so, compare fees, investments, and tax-free liquidity, as well as the receiving plan's provisions for incoming transfers. I mention liquidity because some ERISA plans allow for loans to be initiated post-separation - where borrowing from your account might be more favorable than what you might obtain from a commercial source - in situation. Note that a rollover of Roth assets to a Roth IRA, per the IRS, precludes a subsequent rollover to another employer's Roth 401k (there is legislation pending to change that, but don't hold your breath). Note also that the employer-sponsored plan may have specific rules about distributions at "normal retirement date", however that may be defined in the plan, or at the Required Beginning Date. It may vary from plan to plan, so the rules that apply to you may not be the same as for your spouse. This may have a unique application when it comes to Roth 401k assets, which, per the tax code, are not subject to RMD, but, there is no requirement for a union or employer-sponsored plan to allow you to continue the account past your "normal retirement date". Similarly, some plans allow only for a lump sum payment, others for installments, and still others offer various forms of guaranteed income. Note that the processing of distributions to comply with RMD is slightly different for tax-qualified employer sponsored plans compared to IRAs. Not sure what 65 basis points includes, however, I suspect that is an "all in" fee that includes investment management fees and recordkeeping costs. For comparison, I have a Fidelity IRA with no administrative fees, and I am paying less than 5 basis points on my index investments. I am confident other vendors offer comparable value. For comparison, my 401k from a prior employer, where my account has a my lifetime of savings, has an administrative fee of about $24 a year, and my S&P 500 index fund has an asset management fee of ~1 basis point. Bottom line, it depends. So, assuming you are age 60, and that you are investing for another 30 years, a 60 basis point difference on $100,000 in savings, is $600 a year.
Comments
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
Unfortunately, I don't think so. The compexity seems to be needed in order to accomplish all three goals: (1) A change prior to 2032, (2) Promise/guarantee to make the system indefinitely sustainable, and (3) Return Social Security to its original goal of avoiding poverty in old age. Would be happy to discuss simpler solutions - just don't know any. In fact, my own preferred solution is even more complex. The Trump "Savior" solution (identified above) is simplest and easiest to implement - as the D's will very much enjoy pinning BOTH the benefit cuts and the tax increases on Trump.
Post: Fixing Social Security once and for all
Link to comment from April 19, 2026
My proposed $100,000 cap on FICA wages for benefit calculation purposes may have a greater effect in improving funding than the CRFB's proposal to cap household Social Security benefits at $100,000 a year. Their proposal would leave the FICA wage base provisions unchanged, shifting the program into more of a welfare arrangement - disconnecting wages for tax purposes from wages for benefit calculation purposes. CRFB asserts that their proposal would close 55% of the 75 year funding shortfall. https://www.crfb.org/sixfigurelimit
Post: Fixing Social Security once and for all
Link to comment from April 18, 2026
I have my own ideas regarding Social Security reform - but because they require everyone to participate in the solution, including current retirees, either to pay more taxes or take less in benefits, I doubt anyone would ever approve such changes. Trump Recommendation With respect to an action the Trump Administration might take, here is what I think he should do. Once the Republican nominee for president is known, on or about September 1 2028, Trump could issue one of his infamous edicts and direct the Republicans in the Senate to filibuster the 2029 budget (upon threat of a veto) unless it included his Social Security "fix" - that would have four components:
- A cap on FICA wages of $100,000, applied prospectively starting January 1, 2030,
- A cap on earnings used in the benefit calculation of $100,000 per year, applied to all who commence Social Security benefits on or after January 1, 2030,
- For all who commenced payout prior to January 1, 2030, effective January 1, 2030, recalculate their Social Security benefit as if the $100,000 FICA wage base applied in years prior to 2030 and suspend COLA increases on or after January 1, 2030 until such time as the recalculated monthly benefit includes the $100,000 wage base, and
- A 4% increase (from 6.2% to 10.2%) in the EMPLOYER contribution to Social Security effective January 1, 2030 (total 16.4%).
So, instead of an employer contribution of $3,100 for someone with $50,000 of earnings in 2030 or $6,200 for someone with $100,000 in FICA wages in 2030, the new amounts would be $5,100, $10,200. Those who have been paying FICA taxes on income > $100,000, every year since 2008, would have their benefits limited in the benefits calculation - for all who commence after January 1, 2030, and gradually, for all who commenced prior to January 1, 2030. For most workers, the increase in taxes would be indirect, likely in the form of reduced wage increases in 2030 and 2031. For higher paid workers, they would see net pay increase (while Social Security benefits would decline). For retired higher paid workers, their Social Security benefits would be frozen for a period of time - shortest for those who only infrequently had FICA wages in excess of the wage base. Trump would be able to claim he saved Social Security for all future generations (and just in time for the 2028 General election), while everyone else, especially Democrats would be able to blame him for increased FICA taxes, a la George H. W. Bush “read my lips no new taxes.” ... while Trump will leave office January 20, 2029 before the new taxes take effect. A la Shakespeare: "The evil that men do lives after them; The good is oft interred with their bones. So let it be with 'Trump'." That would return Social Security, over the next few decades, to a program designed to minimize poverty in old age. Or, if we do another iteration similar to the 1983 changes: I would temporarily raise the tax rate in 2032 (creating a specific link between new taxes and benefit payments, confirming that we failed to properly fund the trust and that trust assets have been exhausted) so that inadequate revenue did not require a benefit cut - spread equally between worker and employer. The "surtax" would be recalculated every year and announced in November. To match life expectancy, I would change the Normal Retirement Age from 67 to 70. Here is how: To change the Normal Retirement Age, 67 for people born after 1960, I would add three months per year, starting in 2028 (67 and 3 months for people born in 1961), and three months for every subsequent year until fully phased in of age 70 for those born in 1972. I would also change the benefit formula to reflect the higher "normal" retirement age of 70, anticipating more years with wages. I would gradually change the number of years of earnings in the denominator from 35 to 50. Here is how. I would add one year to the denominator of the benefit calculation for each year starting in 2028, for 15 years, fully phased in at 50 years in 2042. And, I would extend the 8% per year bump for delaying commencement from age 70 to age 75, so, an individual who would receive $1,000 a month at age 70 could delay and commence at 75 in the amount of $1,470. And, to sell it, I would highlight just how little the worker paid in FICA taxes (relative to the benefits received). For all who retire in the future, I would change the taxation so that a worker receives his/her contributions, dollar for dollar, or penny for penny, tax free first. Then, once the employee contributions had been "refunded" (exhausted), I would confirm that and then take the same action regarding the employer contribution, taxable (as if it were a pension). And, then, once every dollar paid in on the worker’s behalf has been received (exhausted), the worker would receive a confirmation of that fact, and, that they are now being funded by other people’s contributions or earnings on trust assets.Post: Fixing Social Security once and for all
Link to comment from April 18, 2026
Thanks Adam. In my 31 years of benefits experience in Human Resources, I worked on over 50 different acquisition and divestiture transactions. Too many times, us benefits weenies were not included in the analysis, discussion and offer process until long after momentum for a deal had metasticized. we took a bath in red ink. Here is an example. During the due diligence phase, after having only a day to look at the material, I was discussing the transaction with my ERISA legal counsel, on my way back from a visit to a field office. As I wound my way through the Appalacian hills/mountains on Interstate 64, I lost cell phone service once. After telling counsel I would stop and complete the discussion from a pay phone if I lost cell phone service, I lost it again. Five minutes later, I pulled into a stop for gas and another 5 minutes later I called from a pay phone. My legal counsel told me to forget it, because during the break he had called the deal makers and they had caved on every one of the seller's benefits demand - most of which was expensive, unnecessary and injurious crap (a separate payroll cycle, an early retirement window, a unique severance and retention program, etc.) My little part of the world was comparatively small potatoes in the M&A space. But, too often, years later, we had to resolve stupid promises and commitments that were obviously affected by the "winner's curse" and/or “the hubris hypothesis.” only to become a drag on post-transaction financial results.
Post: How Deals Hurt Returns
Link to comment from April 4, 2026
I was let go as a COVID casualty in 2021 after a decision was made to discontinue the initiative I was transferred to in 2019. Wasn't done perfectly. Clearly, I could have done a better job preparing. After the transfer to a new position in a brand new unit, the writing was on the wall. I chose to stay, but my trust in the organization wasn't matched. That was a surprise, and disappointing. In particular, on the phone call where I was advised my employment ended that day (I was working mostly remotely), I didn't appreciate a suggestion from HR that my involuntary separation would be communicated and recorded as a "retirement". Obviously, they misunderstood how unemployment compensation works (or they didn't care). However, I have been on the other side of what I used to call "economic capital punishment" - having to explain how the organization's benefits function after separation. I did my best to guide individuals in all of the options and value possible - even after separation - specifically highlighting that benefits, when subject to ERISA (such as your DB pension, your 401k, even your health plan) are themselves legal entities separate from your former employer. More than once I saw the light come on among distressed workers on how their current decision-making could still improve the value obtained from their benefits. One prior comment I agreed with is preparation, being honest with workers about business conditions. For me, "being decent" isn't limited to the severance package, but is better achieved by "being honest" about the sustainability of the business, and employment.
Post: America Doesn’t Just Do Layoffs. It’s Fallen in Love With Them
Link to comment from March 21, 2026
I've been a proponent of HSA-capable coverage since passage of the 2003 legislation and a HSA owner since 1/1/05. Our HSA accounts (myself and my spouse) now exceed $250,000. We transitioned almost all employees with health coverage at my Fortune 100 employer to HSA-capable coverage during the period 2005 - 2011. Some thoughts to comments previously made (my comments are numbered and in italics): "HEALTH SAVINGS ACCOUNT (HSA) is the most efficient tax-advantaged investment account because it offers a triple tax advantage." (1) Actually, once individuals have saved whatever was necessary to obtain the employer financial support for their 401k and HSA, the next dollar would almost always be better invested in the HSA, before the 401k. "HSAs have been around since 2004. The (false) idea was they would help employees become better health care consumers if they were spending their own money." (2) Actually, the most important factor in offering HSA-capable coverage is to offer workers an option where they can avoid overinsurance - paying too much in contributions for coverage they don't need. According to Commonwealth studies, the average out of pocket spend of Americans under age 65 depends on the type of coverage you have: ~$682 for private insurance, ~$725 for uninsured, and ~$253 for public coverage. About 1 in 20 adults under 65 spend over $1,700, while 1 in 100 spend over $5,000 annually. However, the median out of pocket spend is < $250 for all Americans under age 65! So, the money not spent on premiums (contributions) for coverage that is far in excess of what they need, can be saved on a tax preferred basis in the HSA. "Yes, with a HDHP the premiums are lower, but even if those premium savings were all placed the the HSA, it’s not enough to cover the out of pocket risk in many cases." (3) In terms of health care costs, HSA-capable coverage doesn't work unless you actually fund the account. However, for 80+% of workers and their spouses and children under age 65, those who are incurring less than $500 a year in health care expenses, the HSA is almost always the better health coverage choice, accumulating assets for a future when their out of pocket expenses are all but certain to be higher - if only because of Medicare premiums. "I keep $500 (the minimum required balance) in cash. The rest, I invest in low-cost index funds. This allows me to maximize compounding inside the HSA account. ... I will also not touch my HSA at all, even if I have medical expenses. I will reimburse myself 20-30 years down the road (more on this in a bit)." (4) The better option is to invest 100% of the HSA assets in something other than capital preservation, taking any medical spending receipts and putting them in a "shoebox", allowing the assets to accumulate tax deferred, and ultimately provide reimbursement tax free. Your current day payment of medical expenses with after-tax dollars becomes a unique tax-preferred investment. "I also receive a $1,000 HSA match." (5) Most company contributions to HSAs are in the form of a non-elective contribution in order to pass discrimination tests. The better solution for most employers would be to establish the company contribution as a matching contribution, to provide an incentive for individuals to save in their HSA. I recommend you consider using the same method/formula that you already have in place in your 401k plan. "To contribute to a HSA, three things must happen: You need a high deductible health plan (HDHP)." (6) Stop calling it a High Deductible Health Plan. We no longer call the 401k by its original name: a "salary reduction savings plan". And, keep in mind that the $1,700 minimum deductible for HSA-capable coverage is actually LESS THAN the average deductible shown in the 2025 Kaiser survey of employer-sponsored coverage. "Importantly, the HSA balance never expires. This account is always yours to keep, even if you leave your employer." (7) The HSA is much the same as an IRA. With few exceptions, the HSA is not subject to ERISA. You are the owner. Ensure you name a beneficiary - just as you would for an IRA. Available investments for a HSA are much the same as those for an IRA. "If your employer allows it, contributing to an HSA via payroll deduction is generally better than contributing directly, as it avoids the 7.65% FICA (Social Security and Medicare) taxes. Direct, after-tax contributions only save on income tax when filing, missing the payroll tax savings." (8) Of course, you should encourage your employer to add HSA contributions to their cafeteria plan - so that the employer can also avoid FICA and FICA-Med taxes on your contributions. Keep in mind that whether you contribute via your employer's cafeteria plan or by taking an above the line tax deduction when filing your tax return, your contributions also generally avoid most state income taxes. "Withdrawals for medical expenses are tax-free. IRS Publication 502 has information about which expenses qualify as medical expenses." (9) The HSA is not only the benefit that offers Americans the greatest tax preference, it is also the benefit that offers Americans the greatest utility: (a) Eligible expenses today include medical, dental, vision, hearing, Rx, and Long Term Care (LTC) out of pocket expenses, COBRA premium, and certain LTC insurance premiums, (b) Eligible expenses in retirement include all of the above plus Medicare Part A, Part B, Part D and IRMAA premiums, as well as any premiums you pay for employer-sponsored retiree medical coverage, (c) Penalty tax free distributions after age 65 to provide income in retirement, and (d) Survivor benefits, tax preferred reimbursement for medical expenses and premiums for a surviving spouse or other tax dependent, a taxable benefit to other beneficiaries for any residual. The claims clock starts, and eligible expenses include all of those incurred after you open your HSA, REGARDLESS of when you contribute to the HSA. In that way, it is akin to an old benefit concept, what was once known as a ZEBRA. "Once the accumulated funds are exhausted the HSA is useless until the fund is replenished." (10) Generally speaking, this is a misleading statement. Almost all employer-sponsored coverage has a deductible today. The annual Kaiser survey shows that 88% percent of workers with coverage have a general annual deductible that must be met before most services are paid for by the plan and that the average deductible amount in 2025 was $1,886. The average deductible for PPOs was $1,337. So, for example, where a HSA-capable coverage option is offered alongside a traditional PPO, say the HSA-capable coverage and the PPO have the same out of pocket expense maximum, and that the PPO has a deductible of $1,337 and the HSA-capable option has a deductible of $1,700, the participant's focus in deciding which coverage to select should be on the difference in deductibles, here $363 plus any medical expenses (typically Rx) that are not subject to the deductible, but typically have a copay. Most employer sponsored plan communications, such as the Summary of Benefits and Coverage INTENTIONALLY OR UNINTENTIONALLY mislead workers when they are comparing coverage options because they fail to tell the whole story - both point of purchase and point of enrollment cost sharing as well as all employer financial support.
Post: HSA Tips
Link to comment from February 28, 2026
IRC 530A accounts may succeed at creating middle class millionaires ... someday. The average annual rate of return since the end of WWII has been about 11.17% per year. Investing $1,000 at birth today in a tax deferred account @ 11.17%, results in an account worth slightly more than $2.5 million at required minimum distribution age 75. People who have children are, by definition optimists. My understanding is:
- The child is the owner of the account,
- At age 18, the child would be able to convert the assets to a Roth basis - so that distributions may someday be tax free, and so RMD would not apply,
- A child born during 2025 - 2028 can obtain the $1,000 from the Treasury,
- If parents can't fund the account, nothing wrong with asking employers, or grandparents or other relatives,
- They used to call the 401k a "salary reduction savings plan", you can call the account anything you want, including a 530A Account!
Don't leave your child behind ... just in case history repeats itself.Post: Trump Account
Link to comment from February 22, 2026
Just a short update. Not only will you want to investigate this opportunity. You will also want to prompt your employer to consider adding Trump Accounts to your cafeteria plan. Effectively, this treats your child's Trump Account on much the same basis as a Health Savings Account, in terms of the option to use such savings as income in retirement (after age 65). Money goes in pre-tax for Fed, State, FICA, FICA-Med, accumulates tax deferred, and while it is taxable as ordinary income after age 65, ... the tax preferences are significant. Because they are pre-tax for FICA and FICA-Med, it also provides a modest financial incentive for the employer to add this feature to their cafeteria plan. Even if you are not interested, you can do your coworkers a favor by pitching this to your employer. https://401kspecialistmag.com/trump-is-no-franklin-but/ https://401kspecialistmag.com/let-ben-franklin-create-middle-class-millionaires-eradicate-poverty-in-america/ America is 250 years old. Embrace the commitment of Ben Franklin, invest in America's future - our children, grandchildren. Let's go!
Post: Trump Accounts
Link to comment from January 31, 2026
Lots to consider. Typically, a rollover/direct transfer decision is a once in a lifetime decision (for monies in that plan), so, it is typically worth your while to investigate fully, and to have a trusted advisor (not the IRA vendor) review. ERISA protections go beyond bankruptcy. Your employer-sponsored plans are separate legal entities - not part of the union nor the plan sponsor. The fiduciary protections in a plan subject to ERISA are better than IRAs. Further, if your employer sponsored plan is like mine, where there are billions in assets and tens of thousands of participants, including thousands like me who no longer work there, we are all watching the plan sponsor and plan fiduciaries. Lots of litigation out there where plan fiduciaries make mistakes. When you ask about consolidation, I assume you are asking about a rollover or a direct transfer to an IRA or to another employer sponsored plan, right? If so, compare fees, investments, and tax-free liquidity, as well as the receiving plan's provisions for incoming transfers. I mention liquidity because some ERISA plans allow for loans to be initiated post-separation - where borrowing from your account might be more favorable than what you might obtain from a commercial source - in situation. Note that a rollover of Roth assets to a Roth IRA, per the IRS, precludes a subsequent rollover to another employer's Roth 401k (there is legislation pending to change that, but don't hold your breath). Note also that the employer-sponsored plan may have specific rules about distributions at "normal retirement date", however that may be defined in the plan, or at the Required Beginning Date. It may vary from plan to plan, so the rules that apply to you may not be the same as for your spouse. This may have a unique application when it comes to Roth 401k assets, which, per the tax code, are not subject to RMD, but, there is no requirement for a union or employer-sponsored plan to allow you to continue the account past your "normal retirement date". Similarly, some plans allow only for a lump sum payment, others for installments, and still others offer various forms of guaranteed income. Note that the processing of distributions to comply with RMD is slightly different for tax-qualified employer sponsored plans compared to IRAs. Not sure what 65 basis points includes, however, I suspect that is an "all in" fee that includes investment management fees and recordkeeping costs. For comparison, I have a Fidelity IRA with no administrative fees, and I am paying less than 5 basis points on my index investments. I am confident other vendors offer comparable value. For comparison, my 401k from a prior employer, where my account has a my lifetime of savings, has an administrative fee of about $24 a year, and my S&P 500 index fund has an asset management fee of ~1 basis point. Bottom line, it depends. So, assuming you are age 60, and that you are investing for another 30 years, a 60 basis point difference on $100,000 in savings, is $600 a year.
Post: Consolidating 401(k)s in retirement
Link to comment from January 10, 2026