Biden policy proposal would change tax benefits of 401(k) retirement savings

Joe Biden’s tax policy for retirement accounts like 401(k)s, IRAs and others would reportedly cause lower earners to see larger financial benefits while top earners would enjoy decreased benefits when saving for retirement.

The 2020 Democratic presidential nominee's plan would change the current system which allows people to deduct the amount they save in their 401(k) from their taxable income each year.

Under the current system those in higher tax brackets reap a larger reward because their deductions shield them from paying taxes on a portion of their income which would have been subject to tax in a high tax bracket. Likewise, under the current setup those earning a smaller income only avoid paying taxes at the rate of their lower tax bracket.

Biden's plan would change this by instead instituting a flat refundable tax credit for the dollars savers sock away for retirement, according to Roll Call.

"The campaign isn’t saying what that percentage would be, but the Urban-Brookings Tax Policy Center has estimated a 26 percent credit would be roughly revenue neutral over the first 20 years and beyond, which the Biden campaign is aiming for," the outlet reported.