Putnam CEO on Tax Reform’s Impact on Retirement Savings

The video discusses the Pension Protection Act of 2006, highlighting its benefits like automatic enrollment and target date funds, which help individuals save for retirement. It also covers potential government tax reforms that could shift 401K contributions from pretax to post-tax, raising concerns about reduced contributions. The video explains the differences between traditional and Roth 401K plans, emphasizing the tax implications and potential impact on savings. Lastly, it addresses how Congress evaluates retirement savings over a 10-year period, often underestimating the long-term benefits and costs to the treasury.

What is one of the key benefits of the Pension Protection Act of 2006?

• It eliminates taxes on retirement savings.

• It guarantees a fixed retirement income.

• It provides automatic enrollment and escalation.

• It allows for early retirement.

What is a major concern regarding the proposed tax reform on 401K contributions?

• It could lead to a shift from pre-tax to post-tax contributions.

• It will increase the contribution limits.

• It might increase the retirement age.

• It will eliminate the Roth 401K option.

How does a Roth 401K differ from a traditional 401K?

• Roth 401K has higher contribution limits.

• Traditional 401K allows for tax-free withdrawals.

• Roth 401K grows tax-free and withdrawals are tax-free.

• Roth 401K contributions are made pre-tax.

What is the primary concern of the industry regarding changes in 401K contributions?

• It will lead to increased government control.

• It will increase the tax rate on contributions.

• It may discourage people from contributing.

• It will reduce the retirement age.

What is a potential issue with Congress's scoring system for retirement savings?

• It ignores the impact of home mortgages.

• It overestimates the cost to the Treasury.

• It underestimates the cost to the Treasury.

• It accurately predicts long-term savings.