A future without 401(k)s? Advisors don’t like that one bit

investmentnews.com:

There has been a lot of discussion about the fate of the 401(k) system in the month since a pair of academics proposed killing the tax preferences for 401(k)s to help shore up Social Security.

It wasn’t the first time that the idea of reaping tax revenues early from the retirement plans has been explored – members of Congress have discussed it. But past proposals to shift 401(k)s to an exclusive Roth-style tax treatment would simply move government revenues from the future to the present – a one-time event that conveniently fits with the 10-year budgetary window that Congress considers.

The newer pitch would go further, though. In their paper last month, Boston College’s Alicia Munnell and the American Enterprise Institute’s Andrew Biggs gave more options to reduce the tax benefits of the 401(k) system, including eliminating the tax-free growth of account assets and the perks for employers that offer plans.

The pair noted that the defined-contribution savings system has primarily benefited affluent workers who would very likely save and invest for retirement through other avenues in the absence of 401(k)s.

In a response posted on Bloomberg this week, Manhattan Institute senior fellow Allison Schrager predicted that the 401(k) structure will be dead within 10 years.

InvestmentNews asked numerous financial advisors for their thoughts on what the demise of the 401(k) would mean.

Unvaryingly, their written comments showed they’re not keen on changing the system.

“This is the most ridiculous idea I’ve ever heard of. People often tend to care more about taxes (and reducing them) than anything else. Thus, when they contribute to their 401k to reduce their taxable income, they are also saving for their future retirement – which