State of the Union - Mostly good, with a mix of ignorance

If you watched last night’s State of the Union speech by President Obama, you were probably moved by the President's passion and eloquence and also excited by his remarks surrounding the minimum wage increase, energy independence and support for small business.  However, upon a closer observation the president had a few choice (albeit ignorant) words regarding the state of the private retirement system. I'm not sure that I was horrified to hear what he said, but I was dismayed to say the lest.  The President claimed that only the wealthiest Americans were benefiting from tax incentives for the employer-based retirement system, calling them, “upside down retirement tax incentives.”

Plainly stated, he is wrong.  He has incorrect facts, wrong data or wrong data interpretation.  So here are some truths:  80% of 401(k) plan participants are middle class Americans making less than $100,000.  Households making more than $200,000 (the wealthiest Americans) only get 17% of the tax benefits from 401(k) plans, while middle income households enjoy the majority of such tax benefits.”

It's a shame that he chose to taint a moment like this where he discussed expanding coverage by creating a payroll deduct IRA with a subtle, yet slanted attack on the current private system.  So, while we agree that expanding coverage with new and different vehicles is a good idea, it cannot be at the expense of undermining the current retirement plan system.

Last year, yours truly attend a Fly-In to Washington D.C. where we met with various congress people about this issue.  That experience coupled with ongoing negative press and now the State of the Union, it has become apparent to me that there are those in Washington who still do not understand that the retirement savings tax incentive is not a permanent write-off like most other tax breaks – it is a deferral.  A dollar deferred today is a dollar taxed tomorrow.

There's a great website where it will help you facilitate an email to your Congressmen and women, telling them to stay away from our 401(k)s!  Go to SaveMy401k.com today.  It's very easy.