Obama to cap tax-preferred retirement accts to $3MM

[bookie71]

Just wait until someone figures out the potential tax on the Roth IRA's and 401-K's.

[Kiltacular]

How are they going to keep track of this for people who hold tax-preferred retirement accounts at multiple brokers? What about ROTH vs traditional IRAs?

 

Are they going to have similar limits on the absolutely terrible myRA plans they are rolling out?

 

They've already thought of that in the states for the 401k / self employed 401k.  See:http://www.dol.gov/ebsa/5500main.html

 

For plain language, see the "administrative responsibilities" at this link:  https://www.fidelity.com/retirement-ira/small-business/compare-plans

 

I guess they'll just add the form 5500 for other IRAs, SEPs, Roths, etc.

 

Would be easy for them to do. 

[DoddDisciple]

All this is going to do is increase costs, and yet they are also rolling out the myRA which is a 100% money grab. It is quite possibly the scammiest thing I have ever seen the government try to peddle at large to the public, and they are using weasely words and marketing to help ensure people take the poison.

[matjone]

So is it going to be legal to contribute to this as well as other retirement vehicles?  or does it fall under the same cap?

[matjone]

I ran a poll a while back on this, but I think they will end up going back on their word on some of the promised tax advantages of the roth.  Most people won't be affected so you won't lose many votes.  I'll probably contribute to a traditional this year.

[SouthernYankee]

"Are we supposed to be shocked that someone at the government actually used a calculator and figured out how much these accounts were going to cost the government?"

 

-These accounts will "cost" the government NOTHING.

[DoddDisciple]

I think they'd grandfather ROTHs. They honestly can't be stupid enough to shoot themselves in the foot when all of the vehicles they've created, they are partaking of the benefits themselves. Just like the extra pre and post tax money people can put into health savings plans. They say it's for the "poor" and "uninsured," but honestly, neither group do I see putting $12k per year into such plans, but overpaid government works, certainly ;)

 

Then again, they've been known to do such things. Like with the health care reform pretty much killed high deductible plans. I could get one for $25-$50 monthly and then self insure up to $5k per year in costs (exactly how insurance should be). Now, unless I get it through an employer, they want me to PAY $3k-$5k or even more a year for health benefits I don't want. I saw on my wife's plan the combined rate with employer and employee contributions was $12k-$13k PER YEAR for a 22-23 year old with no health problems. Just give me that extra money and I'll self insure :P

[rkbabang]

Are we supposed to be shocked that someone at the government actually used a calculator and figured out how much these accounts were going to cost the government?

 

Canadians, this will happen to the TFSA one day. 

 

That's like saying the ability of shop owners to protect income from being considered by the mafia for how much they owe in protection payments is "costing" the mafia money.    When will people start thinking about the government appropriately like the organized crime organization that it is? I suppose that it is very difficult to do when that very same organization uses the money it steals to "educate" the children in society for 12+ years to instill in them notion that the organization is good and even necessary, and that there would be chaos without it. And even instill a feeling of pride for being lucky enough to live in the area controlled by their local crime syndicate and not another, so much so that many people are willing to sign up to fight, kill and die for the organization by the time they are 18.

 

[ERICOPOLY]

I see the IRAs with the pre-tax contributions as effectively a private/public partnership.

 

The tax bill has not been forgiven.  Rather, the Treasury is entrusting you to compound that tax bill at the rate you compound your account.  Should you be very successful (the kind of success I've seen for example) you will be stuck drawing out your funds at the top tax rate (another way they benefit).  Should you do poorly, perhaps you draw it out at a lower tax rate.  It seems most likely that you will grow the tax liability at a rate faster than the Treasury's interest costs (given that they are financing the partnership with deficit).

[matjone]

rkba - how little government do you want?  I am fairly libertarian but I think we'd be screwed with no protection.  In fact if it weren't for the FBI and others  I imagine a lot of us probably would be paying protection to someone else, or be in a gang ourselves

 

I do like the scene in the godfather where Michael explains to the senator that they are the equals in the area of morality.

[DoddDisciple]

Nice post RKB :D Honestly, if you look at government spending as a % of GDP, especially if you include state and local government, it's insane. It's a "the bureaucracy is expanding to support the needs of the ever-expanding bureaucracy" sort of thing.

 

 

[muscleman]

Is this just a proposal, or is it already law?

I hope this proposal can't pass!

[rkbabang]

rkba - how little government do you want?  I am fairly libertarian but I think we'd be screwed with no protection.  In fact if it weren't for the FBI and others  I imagine a lot of us probably would be paying protection to someone else, or be in a gang ourselves

 

I do like the scene in the godfather where Michael explains to the senator that they are the equals in the area of morality.

 

I love the godfather movies!  Ideally I'd like no government at all.  I'm not sure if humanity is ready for that yet though, any more than a pre-agricultural society is ready for a commodities market.    We are getting there though, violence has been decreasing for centuries and the decrease is accelerating.  When human beings are civilized enough government will not be necessary at all, but even now we shouldn't sugar coat things, wrap it in niceties, and pretend that it is something that it isn't.  We are paying protection money to thugs.

 

[bookie71]

Is this just a proposal, or is it already law?

I hope this proposal can't pass!

It is a proposal and with a Democratic Senate and a Republican House it won't pass, but it is an indication of the thinking of some politicians. 

Years ago they tried to put a surtax on pension distributions over a certain amount, but it was taken out of the law fairly quick.

[Guest wellmont]

Is this just a proposal, or is it already law?

I hope this proposal can't pass!

 

it's "red meat" for core of democratic party that has next to no chance of ever passing. if the dems really want to hit the wealthy they should focus on carried interest, which actually gets blocked by one of the leading dems in the Senate every time it is proposed.