why isn't health insurance and retirement plans taxable?

You are always allowed to select your health insurance on an after tax basis. For some employers, this is the only option. Whereas, most employers use the pre-tax method and only assign employees to after tax deductions, if the employee requests this setup.

Advantages of after tax health deductions:

- it increases your salary for social security; if you are close to retirement and earning more than in previous years this can be helpful

- you are allowed to make benefit changes at any time, not just open enrollment

Having pre-tax health insurance is based on IRS section 125.

As the other person noted, retirement plans are tax deferred. Not tax free.

Health insurance is already a huge expense, especially to small businesses. Making taxable would only add to the burden and stifle economic growth and reduce the number of people that employers can afford to hire.

Retirement plans ARE taxable. Traditional 401k plans are tax deffered, but when the employee takes money out at retirement the money is taxed. Pension payments are taxable when the pension payment is made. ROTH retirement plans are taxable when the money is earned.

Because Congress decided to incentivize the purchase of health insurance and retirement savings. Some might say it's a bone to the health insurance industry and Wall Street, while others say that it's an added incentive to do the right thing and plan for your own needs.

Some retirement plans are taxable currently, such as Roth IRAs and Roth 401(k)s. Others are taxable in the future when you withdraw the funds, such as traditional IRAs and 401(k)s.

because they are not in the tax laws