State | Freeze | Tax Rate
New York | USD 5.85 million | Maximum 16%
Minnesota | USD 1.8 million | Maximum 16%
Connecticut | USD 3.6 million | Maximum 12%
The tax-advantaged 401k pension plan is the most widely used private retirement provision tool in the US. Through extensive incentives for income tax, the 401k model often serves as a model for Germany. If you look at the current situation in 2023, you can see many parallels with private pension insurance of the “first pillar” of pensions. To mention here are mainly Rürup pension policies, also called “basic pension”.
1. Statutory Pension Insurance (OAI) in the USA
The basis of pensions in the USA is statutory pension insurance, abbreviated OAI for old-age insurance. It is – comparable to Germany – part of the social system and obligatory in addition to employees also for the self-employed. The OAI is based on the pay-as-you-go method, so that current contributors pay for current pensioners. There is no building up of its own asset stock.
For the statutory pension, which is therefore fundamentally different from the 401k, the following contribution rates apply:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.