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URL:  http://boards.fool.com/congress-looking-at-cutting-401k-tax-deduction-29547164.aspx

Subject:  Congress looking at cutting 401k tax deduction Date:  9/17/2011  12:42 AM
Author:  intercst Number:  69598 of 78165

http://www.reuters.com/article/2011/09/13/us-retirement-idUS...

The tax break for defined contribution retirement plans will cost the Treasury $212.2 billion between 2010 and 2014, according to the Joint Tax Committee. But the vast amount of that benefit - as much as 80 percent - goes to the top 20 percent of earners, according to estimates from the Tax Policy Center, a nonpartisan, but liberal-leaning, think tank.

For example, a person in the 35 percent tax bracket saves $35 in taxes every time he puts $100 in his 401(k), for a net cost of $65. Someone in the 15 percent bracket pays $85, after tax, for the same $100 contribution. The Pension Rights Center, which has favored traditional defined benefit pensions and other programs aimed at lower-income retirees, advocates rolling back the current $16,500 annual 401(k) tax-deferred contribution limit to the $10,500 level it was a