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Lower 401(k) Limits Would Hurt Younger Workers with Modest Incomes

Setting lower government limits on the contributions that workers can make to their 401(k) accounts would result in lower retirement account balances at retirement for all income groups, according to research by the Employee Benefit Research Institute (EBRI).

The impact on younger workers with modest incomes would be significant. In fact, the research found, if contributions were limited to the lesser of either $20,000 or 20% of annual income — as several members of Congress have proposed — workers age 35 and under could expect a 14% reduction in their 401(k) account balances when they retire.

This information comes from an “infographic” (see below) produced by the American Society for Pension Professionals and Actuaries. Along with a wide range of other content — including videos, articles, and even an online video game — a series of ASPPA infographics like this one will be featured on SaveMy401k.com, a new website set to launch Nov. 12. The launch of the website will kick off a concerted effort by ASPPA and NAPA to protect the tax-deferred status of 401(k) plans as the debate over tax reform heats up on Capitol Hill.

Click here for a pdf of this infographic.

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