401 K retirement tax question

[stpalmer]

Is it true that Obama will tax people's 401 k retirement money?

A friend said she won't vote for him due to this. Her parents put all their retirement funds into a 401. They owned a restaurant and never paid into soc. security, so they depend on their 401K funds.

I want to reassure her, but I can't find any info on his website about it.

[whistle]

1. All 401K plans are deferred tax investments which are taxed

...when drawn upon after maturity. That's the way they work unless your income at retirement is below the lower limit where you won't pay taxes.

[shraby]

2. You just asked a similar question on the

seniors forum. The answer is the same. He plans not to tax seniors making less than $50,000 per year. Nuff said!

[drmeow]

3. I think the twist is that he wants to tax

capital gains and 401K plans technically earn capital gains. Here's a resource:

http://www.politifact.com/truth-o-meter/statements/453/

[A HERETIC I AM]

6. Reading that link indicates he does NOT plan to tax the gains made in a 401(K) plan.

But McCain's assertion about whom capital gains taxes would affect is another story. He says they would affect "mutual funds and 401(k)s." He's right on mutual funds, but not about 401(k) or mutual funds held under a 401(k) retirement plan. A 401(k) is a retirement account to which workers can contribute earnings without paying taxes on the earnings. People aren't taxed on their 401(k) accounts until they withdraw the money. When they do withdraw that money, it's subject to regular income taxes, not capital gains taxes.

[drmeow]

7. Right - but the rethugs are using the capital gains tax

as a way of twisting it to say he's going to tax 401(k)'s.

[Frustratedlady]

4. And what would they rather have? Taxing capital gains or another war?

I think a good argument is that McCain and Palin will cost them much more than Obama and Biden.

They need to look at the entire picture.

[melody]

5. I've got a 401K and I'm voting for Obama

The money will be worth dick if I'm living in a fundamentalist theocratic nation that's itching for Armageddon.

[dana_b]

8. exactly!! well said. n/t