Each year, the Internal Revenue Service (IRS) decides on what the upper limit of 401k contributions that employees are allowed to invest into their accounts. To be fair, these amounts are generously high; investing the limit-or close to the limit-over the long term will still make one a millionaire, assuming a typical market return. However, what should the limit be? Is the wrong question. 401K contribution limits are simply un-American and must be abolished immediately. That’s right: Yes I said that, and yes I’m serious. At best these limits are incredibly short-sighted and at worst, they are downright evil.
But the knuckledraggers will disagree with me “But Dan, if there was no hard limit on what people could put into their 401K accounts, then hypothetically people could just put most of their incomes there!”. Alright, good. This is the point where the hypothetical knuckledragger will fly into a blind fury “What do you mean ‘good’? Don’t you realize that means that BigDaddy government won’t be able to tax all of that income?”. Yes, actually, I’m fully aware of that; and that is a feature not a bug.
Drunk Uncle Sam isn’t exactly known for his foresight, so let me slowly explain it to them using purple crayons. “Dan, if people could stash away untold tens-of-thousands, or Allah-forbid, hundreds-of-thousands of dollars per year into their 401k accounts, it would grow into a massive stockpile that-“ Yes, and I’m going to cut you off right there. In that hypothetical scenario, the savvy American would amass quite a fortune. This is absolutely something to cherish and celebrate because, and pay attention you federal fuckwits, they will not become dependent on Social Security.
Yeah, that’s right, I fucking went there. In case you socialists haven’t realized it yet; Social Security is eventually going to run out of money. When it inevitably does, you fucks who naively bet the farm that it’ll totally-still-exist will be left with not even a pot to piss in. Thus, long-term, Drunk Uncle Sam has literally every incentive to wean citizens off of a clearly-dying system while it still can, assuming long-term fiscal sustainability is the goal.
Although, I might actually be wrong about something; maybe this isn’t incompetence on the part of Drunk Uncle Sam, but actually a calculated malice. That’s right, I’m going down the conspiratorial rabbit hole. Perhaps Drunk Uncle Sam wants a population of hand-to-mouth serfs that are easy to control, rather than a bunch of financially independent fucking Samurai’s. Steady government handouts have historically been used to pacify the population and prevent an uprising. Don’t believe me? Saudi Arabia, the former Yugoslavia, the Soviet Union, and Cuba are all examples of this within the past century. Furthermore, handouts from Drunk Uncle Sam could also be used as a bargaining chip with the populace (i.e turn in your guns for a higher payment). Whatever the case may be, bad actors have an incentive to hook suckers onto their glorified allowance system and to limit 401k contributions.
Besides, there are no other federally-imposed investment caps on the average American. Drunk Uncle Sam doesn’t give you a limit on how much of your mortgage your allowed to pay down every year. Nor is there a limit as to how much gold, crypto, or Dutch tulips that one can buy. Venture capitalists are not handcuffed by a hard ceiling of how much equity the government allows them to buy each year. In fact, the only other noteworthy business that does such a thing is professional sports vis-a-vie their salary caps, which are pretty un-American if you think about it.
The more realistic reason that Drunk Uncle Sam caps 401k contributions is to ensure that Americans have enough unprotected income to tax. After all, the federal government is an absolute dollar-nomming monstrosity that needs to be constantly fed, long-term consequences be damned. But, what if I told you that there is a solution that appeases both sides? Regular readers of mine will see this one coming from a mile away (…all three of you!); lower federal spending and austerity cutbacks. That’s right; if we reduce the government expenditures and overhead, go full Elon, then Drunk Uncle Sam can sustain himself without having to smother the wealth-building opportunities of the typical citizen. Gee wilikers, somebody should run for Congress as a Libertarian and make this happen…
“Dan, this is an utterly ridiculous problem for you to focus on” a reeling reader will inevitably say, desperate for a red herring because they know they can’t refute any of my points. What, they’re going to tell me that most Americans cannot afford to hit the 401k ceiling because they are limited by the cost of housing, groceries, energy, and other expenses? If so, then the pissed-off-protestor will have just made a major concession against themselves; one more damning than they realize. In practice, there are other entities competing for the present-day dollars of Americans, one could even call it a market of sorts. “Goddamn it Dan, is this going to be another the free market should decide lectures?”. Yes, it is. Get up and leave if you don’t like it; make sure to leave a hate-comment on your way out.
If an American with a high income (or is savvy enough to slice their expenses) wants to absolutely pour their money into their retirement accounts, then they should be allowed to do so. Frankly, it’s a bit baffling that Americans will rise up and cry tyranny over a cap on soda sizes but are seemingly okay with these financial handcuffs. The government has no moral right to tell its citizens what it can or cannot do with their income. Stating any other positions is akin to supporting the NannyState, and is honestly a little suspicious; are you a Fed or something?
Let this be the year that you put $400k into your 401k….
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