Forgive Student Loan Debt

[BillyV]

That would fly for the first year, maybe the second. We are now in the third year of his Presidency with no control on spending. His budget told America just how he wanted to spend MORE. The democrats were too embarrassed to even vote on it.
BTW, I was upset with how Bush turned his back to fiscal conservatism.
But the dems passed (they do control half the legislative and the executive branch) the bill keeping the "Bush" tax cuts in place, after the election. If it was going to be that beneficial to the gov't, why didn't they allow them to end? Why did they concentrate on passing an unpopular "mandate" to control "subjects"?
Why are they talking about raising taxes on capital gains? I will give you a hint and it doesn't include any Wall Street wealthy people....can you say mom and pop's 401K, that will have the taxes almost doubled on it? The sad part is that the fools will vote for it, thinking they are going to be hurting the "wealthy", when all they are doing is giving congress permission to tax their retirement accounts into oblivion. The next twenty years are going to make for some strange room mates: children that can't get a job and living at home/ parents that are wiped out from taxes allowing to their eventually employed student children to take over the house and then the parents moving into the basement, while the children are raising families in the same house. People moving into together to make ends meet. This man, the President is setting this country onto the path of becoming something it never was, a society of subjects, that looks to the gov't to show them how to think, eat, exercise, work, etc. Forward! LEMMINGS

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

 

[chanel]

That's simple. To buy votes.

 

[Katzndogz]

Unfortunately most of the grads today with liberal arts degrees are going to be competing over jobs at the nearest Burger King. There's no way around that inescapable fact.

Someone contemplating college today should spend their senior year in high school going to colleges on recruitment day. Go visit the companies recruiting graduates for jobs and find out what they are looking for and what their propsects are really like.

 

[Mad Scientist]

Read the image and tell me why you think things are just fine as they are.

I borrowed about 16,000 but it was at a real low rate. Looks like that person either borrowed from a bank or re-financed, or consolidated it later. Either way, not enough info there.

But yeah, Student Loans should be forgiven.

Anyone who was for the Bank Bailout should be for Student Loan forgiveness as well.

 

[peach174]

They aren't forgiving the student loans, they are keeping the low interest rate the same and spinning it to the college students that their loans will be forgiven.
It's nothing more than politics again in order the get the college kids to vote in November.

 

[Toddsterpatriot]

Read the image and tell me why you think things are just fine as they are.

I borrowed about 16,000 but it was at a real low rate. Looks like that person either borrowed from a bank or re-financed, or consolidated it later. Either way, not enough info there.

But yeah, Student Loans should be forgiven.

Anyone who was for the Bank Bailout should be for Student Loan forgiveness as well.

But the banks repaid the bailout loans.
I'd be for forgiving the student loans if the students also repaid them.

 

[Katzndogz]

There is no such thing as forgiving the loans. The debt still exists, it is just paid for by taxpayers. If students don't want to pay the debt, or can't, there should be at least a method where they don't get to keep the benefit, dubious as it is. They should have the degrees revoked. After all, if they buy a car and fail to make the payments the car will be repossessed.

If a student really is interested in shifting the payment of the loan to the public, their names should be removed from the list of graduates.

 

[OldManOnFire]

These kids were led to believe that they would get good jobs holding degrees in transgender pottery making. Now that they find out they are holding worthless degrees they are understandably upset. They are, in some ways, like the person who falls for some stock scheme and lured into investing into a worthless company. These students were lied to from the very beginning. Mostly lied to by the universities themselves. These students bought easy classes and lots of drinking, drugs, sex and parties as the college experience. They got what they paid for, they just paid too much for it.

No one led any kid to believe they will earn (x)$ if they obtain a certain degree?? Don't make up stuff just to make some point which is not valid.

Degrees ARE NOT worthless! First off, no matter the degree, this is better than 25 million other job seekers with no college. Secondly, those with college degrees have an unemployment rate which I believe is like 2%!

Your political bias has you believing someone lied to these kids which is absurd at best!

This is a rather old study.

The unemployment rate for 18-to-24 year-olds is 16.3 percent, according to the Pew Research Center—which used numbers from the U.S. Bureau of Labor Statistics to compile its data. The number of employed college-aged Americans is the lowest since the government began keeping tabs in 1948.

Employment for college-aged students hit all time low - News - Indiana Statesman - Indiana State University

Lets use something newer.

53% of Recent College Grads Are Jobless or Underemployed—How? - Jordan Weissmann - Business - The Atlantic

53% of Recent College Grads Are Jobless or Underemployed

More than half of America's recent college graduates are either unemployed or working in a job that doesn't require a bachelor's degree, the Associated Press reported this weekend

That said, not all degrees are created equal. The AP reports that students who graduated out of the sciences or other technical fields, such as accounting, were much less likely to be jobless or underemployed than humanities and arts graduates. You know that old saw about how college is just about getting a fancy piece of paper? Not true. For an education to be worth anything these days, it needs to impart skills.

When there were fewer graduates, a generic college degree used to be a valuable credential. Now that the market is flooded, diplomas count less, and specific skills count more. This means that, in many instances, associates and technical degrees may be more financially valuable than a liberal arts degree. After all, some of the fastest growing job categories are expected to be in so-called "middle-skill" positions such as nursing, which do not require a full, four-year education. It's one more sign that, for people seeking to fix America's employment picture, "college for all" is the wrong mantra. We need to be talking about "skills for all" instead.

Maybe you should study this government data; Table A-4. Employment status of the civilian population 25 years and over by educational attainment

It is stupid to believe that a person has no advantage in job seeking if they possess a college degree?

If they possess a college degree in which the supply is much greater than the demand, then they will have more struggle finding employment. But they can obtain more education, more skills, or change direction, whatever is necessary to chase the available jobs...

 

[OldManOnFire]

That would fly for the first year, maybe the second. We are now in the third year of his Presidency with no control on spending. His budget told America just how he wanted to spend MORE. The democrats were too embarrassed to even vote on it.
BTW, I was upset with how Bush turned his back to fiscal conservatism.
But the dems passed (they do control half the legislative and the executive branch) the bill keeping the "Bush" tax cuts in place, after the election. If it was going to be that beneficial to the gov't, why didn't they allow them to end? Why did they concentrate on passing an unpopular "mandate" to control "subjects"?
Why are they talking about raising taxes on capital gains? I will give you a hint and it doesn't include any Wall Street wealthy people....can you say mom and pop's 401K, that will have the taxes almost doubled on it? The sad part is that the fools will vote for it, thinking they are going to be hurting the "wealthy", when all they are doing is giving congress permission to tax their retirement accounts into oblivion. The next twenty years are going to make for some strange room mates: children that can't get a job and living at home/ parents that are wiped out from taxes allowing to their eventually employed student children to take over the house and then the parents moving into the basement, while the children are raising families in the same house. People moving into together to make ends meet. This man, the President is setting this country onto the path of becoming something it never was, a society of subjects, that looks to the gov't to show them how to think, eat, exercise, work, etc. Forward! LEMMINGS

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

In BOLD above this is not true at all. Pre-taxed 401K investments are not taxed again when cashed out. Tax-deferred 401K investments must pay applicable income taxes when cashed out. On both investments above, any gain on the original investment is subject to capital gains taxes when cashed out. There is some risk in tax-deferred investments because no one knows the tax rates and personal tax situation 30-40 years into the future?? We also don't know what the capital gains taxes might be in a few decades...

 

[OldManOnFire]

They aren't forgiving the student loans, they are keeping the low interest rate the same and spinning it to the college students that their loans will be forgiven.
It's nothing more than politics again in order the get the college kids to vote in November.

I just read in the news today, which I did not know until then, is that the interest rate increases by July 1, and it ONLY applies to NEW loans after July 1...it has ZERO impact on existing student loans.

The same article also said that on 'average', the students on new loans after July 1 will pay about $1000 more due to higher interest rates over a ten year period. Even some college graduates can do the math and understand this is about $100 extra per year...mouse-nuts!

All of this issue is Obama pandering for votes...it is pathetic that he has gripped the nation on this non-issue...

 

[Toddsterpatriot]

That would fly for the first year, maybe the second. We are now in the third year of his Presidency with no control on spending. His budget told America just how he wanted to spend MORE. The democrats were too embarrassed to even vote on it.
BTW, I was upset with how Bush turned his back to fiscal conservatism.
But the dems passed (they do control half the legislative and the executive branch) the bill keeping the "Bush" tax cuts in place, after the election. If it was going to be that beneficial to the gov't, why didn't they allow them to end? Why did they concentrate on passing an unpopular "mandate" to control "subjects"?
Why are they talking about raising taxes on capital gains? I will give you a hint and it doesn't include any Wall Street wealthy people....can you say mom and pop's 401K, that will have the taxes almost doubled on it? The sad part is that the fools will vote for it, thinking they are going to be hurting the "wealthy", when all they are doing is giving congress permission to tax their retirement accounts into oblivion. The next twenty years are going to make for some strange room mates: children that can't get a job and living at home/ parents that are wiped out from taxes allowing to their eventually employed student children to take over the house and then the parents moving into the basement, while the children are raising families in the same house. People moving into together to make ends meet. This man, the President is setting this country onto the path of becoming something it never was, a society of subjects, that looks to the gov't to show them how to think, eat, exercise, work, etc. Forward! LEMMINGS

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

In BOLD above this is not true at all. Pre-taxed 401K investments are not taxed again when cashed out. Tax-deferred 401K investments must pay applicable income taxes when cashed out. On both investments above, any gain on the original investment is subject to capital gains taxes when cashed out. There is some risk in tax-deferred investments because no one knows the tax rates and personal tax situation 30-40 years into the future?? We also don't know what the capital gains taxes might be in a few decades...

There is no capital gains tax on capital held inside a 401K, IRA or other tax deferred acount. Roth or otherwise.

 

[BillyV]

That would fly for the first year, maybe the second. We are now in the third year of his Presidency with no control on spending. His budget told America just how he wanted to spend MORE. The democrats were too embarrassed to even vote on it.
BTW, I was upset with how Bush turned his back to fiscal conservatism.
But the dems passed (they do control half the legislative and the executive branch) the bill keeping the "Bush" tax cuts in place, after the election. If it was going to be that beneficial to the gov't, why didn't they allow them to end? Why did they concentrate on passing an unpopular "mandate" to control "subjects"?
Why are they talking about raising taxes on capital gains? I will give you a hint and it doesn't include any Wall Street wealthy people....can you say mom and pop's 401K, that will have the taxes almost doubled on it? The sad part is that the fools will vote for it, thinking they are going to be hurting the "wealthy", when all they are doing is giving congress permission to tax their retirement accounts into oblivion. The next twenty years are going to make for some strange room mates: children that can't get a job and living at home/ parents that are wiped out from taxes allowing to their eventually employed student children to take over the house and then the parents moving into the basement, while the children are raising families in the same house. People moving into together to make ends meet. This man, the President is setting this country onto the path of becoming something it never was, a society of subjects, that looks to the gov't to show them how to think, eat, exercise, work, etc. Forward! LEMMINGS

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

In BOLD above this is not true at all. Pre-taxed 401K investments are not taxed again when cashed out. Tax-deferred 401K investments must pay applicable income taxes when cashed out. On both investments above, any gain on the original investment is subject to capital gains taxes when cashed out. There is some risk in tax-deferred investments because no one knows the tax rates and personal tax situation 30-40 years into the future?? We also don't know what the capital gains taxes might be in a few decades...

All contributions to a 401K plan prior to 2006 were before tax, meaning they were not included in your current income or taxed currently. When those contributions, and the income earned on them, are distributed, income tax is due at ordinary rates; there is no capital gains tax. Beginning in 2006, an alternative plan was offered called a Roth 401K (like a Roth IRA that debuted a few years before, although not as widely available as most employers did not offer them). A contribution to a Roth 401K is included in your income currently and taxed currently. The earnings in the plan grow tax deferred and, in most cases are distributed completely free of tax, therefore, again, no capital gains tax. The main reason people choose a Roth plan is to avoid vagaries in the tax law 30-40 years into the future by paying tax on the income today; however, only a very small portion of “mom and pop’s 401K” would likely be in a Roth, because it is so new. In both cases, however, any gain on the original investment is not subject to the capital gains tax.

401(k) IRA matrix - Wikipedia, the free encyclopedia

 

[DGS49]

Kids have no sense about the value of money at 18 years old (when the major decisions are made). Mention that these loans are going to have to be paid with "after tax dollars," and they look at you like a deer caught in headlights. Parents want their kids to be happy, so don't bring the dose of reality that parents are supposed to provide.

The options to get a good education at a reasonable cost are out there, but nobody wants to hear about it. Community college? You must be kidding! Commute? Not me! Go part time so you can work more hours to defray the costs? I'm no slave! Military service for the GI Bill? Good Heavens, no! Hell, employers have been known to assist with tuition, provided the courses have something to do with your job.

It can be done, but not many people have the maturity and determination at 18 years old.

 

[Katzndogz]

No one led any kid to believe they will earn (x)$ if they obtain a certain degree?? Don't make up stuff just to make some point which is not valid.

Degrees ARE NOT worthless! First off, no matter the degree, this is better than 25 million other job seekers with no college. Secondly, those with college degrees have an unemployment rate which I believe is like 2%!

Your political bias has you believing someone lied to these kids which is absurd at best!

This is a rather old study.

The unemployment rate for 18-to-24 year-olds is 16.3 percent, according to the Pew Research Center—which used numbers from the U.S. Bureau of Labor Statistics to compile its data. The number of employed college-aged Americans is the lowest since the government began keeping tabs in 1948.

Employment for college-aged students hit all time low - News - Indiana Statesman - Indiana State University

Lets use something newer.

53% of Recent College Grads Are Jobless or Underemployed—How? - Jordan Weissmann - Business - The Atlantic

53% of Recent College Grads Are Jobless or Underemployed

More than half of America's recent college graduates are either unemployed or working in a job that doesn't require a bachelor's degree, the Associated Press reported this weekend

That said, not all degrees are created equal. The AP reports that students who graduated out of the sciences or other technical fields, such as accounting, were much less likely to be jobless or underemployed than humanities and arts graduates. You know that old saw about how college is just about getting a fancy piece of paper? Not true. For an education to be worth anything these days, it needs to impart skills.

When there were fewer graduates, a generic college degree used to be a valuable credential. Now that the market is flooded, diplomas count less, and specific skills count more. This means that, in many instances, associates and technical degrees may be more financially valuable than a liberal arts degree. After all, some of the fastest growing job categories are expected to be in so-called "middle-skill" positions such as nursing, which do not require a full, four-year education. It's one more sign that, for people seeking to fix America's employment picture, "college for all" is the wrong mantra. We need to be talking about "skills for all" instead.

Maybe you should study this government data; Table A-4. Employment status of the civilian population 25 years and over by educational attainment

It is stupid to believe that a person has no advantage in job seeking if they possess a college degree?

If they possess a college degree in which the supply is much greater than the demand, then they will have more struggle finding employment. But they can obtain more education, more skills, or change direction, whatever is necessary to chase the available jobs...

An argument that flies in the face of reality. They can acquire more skills or even SOME skills. Skills are something that grads don't get from vanity degrees.

 

[logical4u]

That would fly for the first year, maybe the second. We are now in the third year of his Presidency with no control on spending. His budget told America just how he wanted to spend MORE. The democrats were too embarrassed to even vote on it.
BTW, I was upset with how Bush turned his back to fiscal conservatism.
But the dems passed (they do control half the legislative and the executive branch) the bill keeping the "Bush" tax cuts in place, after the election. If it was going to be that beneficial to the gov't, why didn't they allow them to end? Why did they concentrate on passing an unpopular "mandate" to control "subjects"?
Why are they talking about raising taxes on capital gains? I will give you a hint and it doesn't include any Wall Street wealthy people....can you say mom and pop's 401K, that will have the taxes almost doubled on it? The sad part is that the fools will vote for it, thinking they are going to be hurting the "wealthy", when all they are doing is giving congress permission to tax their retirement accounts into oblivion. The next twenty years are going to make for some strange room mates: children that can't get a job and living at home/ parents that are wiped out from taxes allowing to their eventually employed student children to take over the house and then the parents moving into the basement, while the children are raising families in the same house. People moving into together to make ends meet. This man, the President is setting this country onto the path of becoming something it never was, a society of subjects, that looks to the gov't to show them how to think, eat, exercise, work, etc. Forward! LEMMINGS

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

I understand that "congress" made it okay for 401K to grow "tax free". I have no doubt in my mind that if capital gains taxes are increased that "congress" will start the chipping away at the 401Ks (the ones that have built up the most, because it isn't "fair" that those people could invest money, even if it was a sacrifice, and others ..... just couldn't, so the "wealthy" should be taxed more, never mind that they planned to make it last, we will give them a "voucher"...). If the entitlement society continues, it will be a full fledged raid on the 401K (some dems are already eying the 'piggybank'), and if you try to withdraw your money, the penalties will be severe (benefitting the gov't of course). If you are not thinking about voting to protect your investments, 401K, future, then go ahead and vote for the Bernie Madoff in office now (how many promises did he make for investments that went belly up?). He is just as big of fraud, people just haven't seen the Ponzi scheme trails that lead to him yet.

The student loans: just another Ponzi scheme that his lemmings will buy. They will believe him to find out that they will be taxed the amount of "forgiveness" on income taxes (or some other similar bait and switch). They will say how great he is, until the bill is due, and then, it will be too late.

 

[logical4u]

They aren't forgiving the student loans, they are keeping the low interest rate the same and spinning it to the college students that their loans will be forgiven.
It's nothing more than politics again in order the get the college kids to vote in November.

Bernie Madoff is at it again....

 

[logical4u]

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

In BOLD above this is not true at all. Pre-taxed 401K investments are not taxed again when cashed out. Tax-deferred 401K investments must pay applicable income taxes when cashed out. On both investments above, any gain on the original investment is subject to capital gains taxes when cashed out. There is some risk in tax-deferred investments because no one knows the tax rates and personal tax situation 30-40 years into the future?? We also don't know what the capital gains taxes might be in a few decades...

All contributions to a 401K plan prior to 2006 were before tax, meaning they were not included in your current income or taxed currently. When those contributions, and the income earned on them, are distributed, income tax is due at ordinary rates; there is no capital gains tax. Beginning in 2006, an alternative plan was offered called a Roth 401K (like a Roth IRA that debuted a few years before, although not as widely available as most employers did not offer them). A contribution to a Roth 401K is included in your income currently and taxed currently. The earnings in the plan grow tax deferred and, in most cases are distributed completely free of tax, therefore, again, no capital gains tax. The main reason people choose a Roth plan is to avoid vagaries in the tax law 30-40 years into the future by paying tax on the income today; however, only a very small portion of “mom and pop’s 401K” would likely be in a Roth, because it is so new. In both cases, however, any gain on the original investment is not subject to the capital gains tax.

401(k) IRA matrix - Wikipedia, the free encyclopedia

If you vote for an increase in capital gains tax (thinking you are sticking it to the "wealthy"), 401K 'capital gains' can be taxed at a the same higher rate when you start withdrawing it. The people that make the rules are playing "bait and switch". They are holding out the "rich" to make you think you will be taking more from them, in reality, they will write loopholes (how many 'middle income' people do you think are in congress, seriously?) to protect the wealthy and the average 'subject' will lose most of their 401K gains and interest to the gov't. And the ones that voted for it will be too embarrassed to open their mouths.

 

[BillyV]

In BOLD above this is not true at all. Pre-taxed 401K investments are not taxed again when cashed out. Tax-deferred 401K investments must pay applicable income taxes when cashed out. On both investments above, any gain on the original investment is subject to capital gains taxes when cashed out. There is some risk in tax-deferred investments because no one knows the tax rates and personal tax situation 30-40 years into the future?? We also don't know what the capital gains taxes might be in a few decades...

All contributions to a 401K plan prior to 2006 were before tax, meaning they were not included in your current income or taxed currently. When those contributions, and the income earned on them, are distributed, income tax is due at ordinary rates; there is no capital gains tax. Beginning in 2006, an alternative plan was offered called a Roth 401K (like a Roth IRA that debuted a few years before, although not as widely available as most employers did not offer them). A contribution to a Roth 401K is included in your income currently and taxed currently. The earnings in the plan grow tax deferred and, in most cases are distributed completely free of tax, therefore, again, no capital gains tax. The main reason people choose a Roth plan is to avoid vagaries in the tax law 30-40 years into the future by paying tax on the income today; however, only a very small portion of “mom and pop’s 401K” would likely be in a Roth, because it is so new. In both cases, however, any gain on the original investment is not subject to the capital gains tax.

401(k) IRA matrix - Wikipedia, the free encyclopedia

If you vote for an increase in capital gains tax (thinking you are sticking it to the "wealthy"), 401K 'capital gains' can be taxed at a the same higher rate when you start withdrawing it. The people that make the rules are playing "bait and switch". They are holding out the "rich" to make you think you will be taking more from them, in reality, they will write loopholes (how many 'middle income' people do you think are in congress, seriously?) to protect the wealthy and the average 'subject' will lose most of their 401K gains and interest to the gov't. And the ones that voted for it will be too embarrassed to open their mouths.

Yes, but you see, the point is that those withdrawals are already taxed at ordinary rates, so an increase in the capital gains tax would not have any effect. If you're saying that Congress can and does change the rules of the game and could increase ordinary income tax rates, thereby affecting 401K distributions, you are correct. Given the debt we have amassed, I think it's very likely that ordinary rates will go up. That just has no bearing on capital gains rates, sorry.

 

[OldManOnFire]

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

In BOLD above this is not true at all. Pre-taxed 401K investments are not taxed again when cashed out. Tax-deferred 401K investments must pay applicable income taxes when cashed out. On both investments above, any gain on the original investment is subject to capital gains taxes when cashed out. There is some risk in tax-deferred investments because no one knows the tax rates and personal tax situation 30-40 years into the future?? We also don't know what the capital gains taxes might be in a few decades...

There is no capital gains tax on capital held inside a 401K, IRA or other tax deferred acount. Roth or otherwise.

This is true only for capital...

 

[OldManOnFire]

You do understand that the point of a 401K is that it grows tax free, right? And that distributions from 401Ks are not eligible for capital gains treatment, since the income was never taxed? An increase in capital gains tax will unevenly affect seniors more than others, but not because of their 401Ks; they often have other invested funds in addition to retirement portfolios.

The idea that student loans should be repaid by the government is ludicrous; the benefit most of these grads will see in increased earnings over a lifetime will more than cover whatever they paid, unless they were shortsighted enough to not only borrow funds, but also to use them to study things that are not marketable. Even so, a college degree in any discipline still makes you vastly more marketable than someone without one. According to the IRS, the median income of a household with a bachelors degree holder in 2010 was $82,109; with a high school degree, $38,976. That equates to $1.7 million over a 40 year career. Why should the taxpayers relieve them of their debt burden when they will be more than able to repay it?

In BOLD above this is not true at all. Pre-taxed 401K investments are not taxed again when cashed out. Tax-deferred 401K investments must pay applicable income taxes when cashed out. On both investments above, any gain on the original investment is subject to capital gains taxes when cashed out. There is some risk in tax-deferred investments because no one knows the tax rates and personal tax situation 30-40 years into the future?? We also don't know what the capital gains taxes might be in a few decades...

All contributions to a 401K plan prior to 2006 were before tax, meaning they were not included in your current income or taxed currently. When those contributions, and the income earned on them, are distributed, income tax is due at ordinary rates; there is no capital gains tax. Beginning in 2006, an alternative plan was offered called a Roth 401K (like a Roth IRA that debuted a few years before, although not as widely available as most employers did not offer them). A contribution to a Roth 401K is included in your income currently and taxed currently. The earnings in the plan grow tax deferred and, in most cases are distributed completely free of tax, therefore, again, no capital gains tax. The main reason people choose a Roth plan is to avoid vagaries in the tax law 30-40 years into the future by paying tax on the income today; however, only a very small portion of “mom and pop’s 401K” would likely be in a Roth, because it is so new. In both cases, however, any gain on the original investment is not subject to the capital gains tax.

401(k) IRA matrix - Wikipedia, the free encyclopedia

Well my 401K plan goes back a long way and all of my contributions were pre-taxed. But within my 401K plan some of the investment was held in cash, and the rest in various stock positions. I pay no income tax on the original investment because it was pre-taxed but paid capital gains taxes on all stock gains.

BTW; government can change the taxation policy on a Roth IRA or anything anytime so there are never guarantees that tax rates, etc. will be the same 30-40 years from now.

Thank you for the information...