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Saturday, April 6, 2013

Obama Budget to Limit IRAs to $3 Million

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Comments

The cap on 401k's is another version of the old "Success Tax" (see http://news.stanford.edu/pr/97/970813pensiontax.html for the history)

Such a proposal can only be fair if it includes the present value of defined benefit pensions. Some of those can exceed $3 million too.

The safe withdrawal rate for a $3 million account is $120k per year. That's only halfway to what Obama has deemed "rich". It's almost as if it's only about revenue.

If we're going to tax non-rich retirees, why not go all the way with Australia-style cutoff of benefits at middle class income levels?

Posted by: AMTbuff | Apr 6, 2013 11:24:20 AM

Will this proposal include rollover IRAs from 401ks and pension plans? The problem with Romney-type IRAs is most probably one of undervaluation. Instead of attacking the problem directly, the Obama proposal would hit thousands of people whose only mistake was to save and invest wisely. Why doesn't the White House hire a good tax lawyer who easily could find dozens of tax loopholes deserving of being shut down, all of which would raise more money that this proposal.

Posted by: Mark | Apr 6, 2013 10:18:16 PM

Obama has said that at some point one has "made enough money." Now, he's the expert at detemining when one has "saved enough money" for retirement. He actually believes that money earned by private citizens belongs to the government, which should decide how much you can keep. And, don't think that his objective is "tax fairness" or "for the children," either.

Posted by: Woody | Apr 7, 2013 11:01:55 AM