A Cold, Wet, and Windy Tax "Shelter"

For some clear thinking about a common tax "shelter", mosey on over to this article on 401(k) plans by James Altucher. Here's a sample of some thinking unclouded by conventional "wisdom" or the doe-eyed trust in government-as-brain-substitute too many people seem to have these days:

Let's look at it conceptually for a second and then I will look at the cons.

You are paid money by an employer. You have that money in your hands for five seconds, and then it is whisked away into this account and you can't look at it again for another 20-35 years unless you want to pay a massive penalty.

Will you be alive in 30 years? Hopefully! Else you will never see that money again.

Ok, that's my first problem with 401k. I like to have total control over money that is called mine.

Perhaps I am being overly harsh to call so many people naive. The tax code, designed to "nudge" us into letting the fed make choices for us, is quite complex, and most people, understandably, don't want to waste precious time having to contemplate it. Altucher does a great job of essentializing this particular scheme and asking the right kinds of questions to help his readers realize that perhaps what our tax code encourages us to do isn't necessarily wise.

-- CAV