Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 11-20-2014, 03:25 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
We are making five recommendations to the Commissioner of Internal
Revenue.

To improve IRS’s ability to detect and pursue noncompliance associated
with undervalued assets sheltered in IRAs and prohibited transactions,
we recommend that the Commissioner of Internal Revenue:

• Approve plans to fully compile and digitize the new data from
electronic and paper-filed Form 5498s to ensure the efficient use of
the information on nonpublicly traded IRA assets.

• Conduct research using the new Form 5498 data to identify IRAs
holding nonpublic asset types, such as profits interests in private
equity firms and hedge funds, and use that information for an IRSwide
strategy to target enforcement efforts.

• Work in consultation with the Department of the Treasury on a
legislative proposal to expand the statute of limitations on IRA
noncompliance to help IRS pursue valuation-related misreporting and
prohibited transactions that may have originated outside the current
statute’s 3-year window.

To help taxpayers better understand compliance risks associated with
certain IRA choices and improve compliance, we recommend that the
Commissioner of Revenue:

• Building on research data on IRAs holding nonpublic assets, identify
options to provide outreach targeting taxpayers with nonpublic IRA
assets and their custodians, such as reminder notices that engaging
in prohibited transactions can result in loss of the IRA’s tax-favored
status.

• Add an explicit caution in Publication 590 Individual Retirement
Arrangements (IRAs) for taxpayers about the potential risk of
committing a prohibited transaction when investing in nonpublicly
traded assets or directly controlling IRA assets.
Looks like the issue is not "largish IRAs", but rather IRAs invested in "nonpublicly
traded assets".

I'll call this the [mod edit] effect.
__________________

__________________
Independent is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-20-2014, 04:21 PM   #22
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,709
Quote:
Originally Posted by 2B View Post
The unfortunate aspect of any tax intended for "the rich" inevitably falls on the middle class sooner rather than later. There really isn't that much money available if any tax is just restricted to "the rich." I think that the original intent of the income tax was to just hit the top 2%. How'd that work out for all of us?
I don't really go along with that line of thinking, if you mean taxation isn't fair, or required at all. I can't go back in time to really understand what was going on at some time when a 2% tax (Wilson-Gorman?) was passed, but abuse of power and privilege is ascending. And wages are stagnating. So there have always been good reason to tax the excess and fund something worthy.

Most of us comply with tax law and add something to an IRA. I remember putting $1500 or so into my IRA for quite awhile. I amassed a fortune of $41,590.51 by 1994. It is still growing, and I have contributed when I can, but my total is probably way short of many others.

I know I'm one of the dumb ones who really needed the gov't to come up with some kind of sweetener to convince me to save, and I am fine with that. But how does one accumulate over $100 million in an IRA? Some of the figures in the OP article and others I've read are astounding.
__________________

__________________
target2019 is offline   Reply With Quote
Old 11-20-2014, 04:22 PM   #23
Thinks s/he gets paid by the post
 
Join Date: Aug 2006
Posts: 1,361
I think the issue that they need to address is the people who put non-publicly traded securities in them with a stated valuation that is much, much lower than their actual value. Basically, they lie to get around the normal contribution limits.

That is how they are getting these massive IRA balances, for the most part.

They just need to limit what you can put into an IRA to publicly traded securities, IMO. It also might be worth an audit or two of the $100+ million IRAs to see if the valuation used when the securities were put into them passes the smell test.

"A small number of taxpayers has accumulated larger IRA balances, likely by investing in assets unavailable to most investors—initially valued very low and offering disproportionately high potential investment returns if successful, the GAO noted."
__________________
Hamlet is offline   Reply With Quote
Old 11-20-2014, 04:43 PM   #24
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 119
Quote:
Originally Posted by brewer12345 View Post
Since I don't have a $100MM IRA, I will not spend a lot of time sweating this one...
Most expats aren't tax cheats, but now they are all forced to deal with increased regulations such as FATCA and what have you. I'm afraid that type of overreach will happen here as well.

There should be an easy solution to fix it. Simply go after the people who put in non publicly traded securities in their IRA's. But I doubt that this limited type of action is what will happen...
__________________
george76 is offline   Reply With Quote
Old 11-20-2014, 05:27 PM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by george76 View Post
Most expats aren't tax cheats, but now they are all forced to deal with increased regulations such as FATCA and what have you. I'm afraid that type of overreach will happen here as well.

There should be an easy solution to fix it. Simply go after the people who put in non publicly traded securities in their IRA's. But I doubt that this limited type of action is what will happen...
Even easier: do not allow non-publicly traded/registered securities to be put in IRAs. End of problem.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 11-20-2014, 05:44 PM   #26
Thinks s/he gets paid by the post
 
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 2,147
I read an in-depth article on accumulating such large dollars in an IRA. It can be done by people in the finance industry and it can all be legal. If we are going to throw stones at those who take legal approaches to minimize tax dollars and/or maximize government handouts benefits, most of us on this board better duck.
__________________
Hermit is offline   Reply With Quote
Old 11-20-2014, 05:49 PM   #27
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 16,375
I don't think I am a dinosaur but I can remember when IRAs first started, were refined, and later the Roth version was offered. None of these programs were written in stone. That unexpected consequences might cause at least a discussion about a little backpedaling can't be a surprise to anyone. Not a political matter imo, but a fiscal one.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 11-20-2014, 05:51 PM   #28
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 2,726
Actually it sounds like a simple step no non publicly traded securities are allowed in an IRA. That seems to solve the problem of valuation.
Of course I do think that since IRA's and 401ks are for an individual and their spouse, that the RMD of the original owner or spouse should be used on non spousal withdrawals. Futher that if a IRA is descending to a second non spouse from a first non spouse then a 10 year withdrawal should be imposed.
__________________
meierlde is offline   Reply With Quote
Old 11-20-2014, 05:51 PM   #29
Recycles dryer sheets
 
Join Date: Apr 2007
Posts: 119
Quote:
Originally Posted by brewer12345 View Post
Even easier: do not allow non-publicly traded/registered securities to be put in IRAs. End of problem.
I agree completely.
__________________
george76 is offline   Reply With Quote
Old 11-20-2014, 06:03 PM   #30
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,163
Quote:
Originally Posted by brewer12345 View Post
Even easier: do not allow non-publicly traded/registered securities to be put in IRAs. End of problem.
Easier said than done. The people who take advantage of these things have the incentive, the money and consequently the ear of congress critters to fight any such change.
__________________
Living an analog life in the Digital Age.
Gumby is offline   Reply With Quote
Old 11-20-2014, 06:52 PM   #31
Moderator Emeritus
 
Join Date: Oct 2007
Posts: 4,929
Quote:
Originally Posted by brewer12345 View Post
Even easier: do not allow non-publicly traded/registered securities to be put in IRAs. End of problem.
No precious metal bullion? No private mortgages? No real estate ("I promise not to make personal use of it, mkay?") ? No interest in a private business?

Well, there goes THAT retirement plan...

I'm fine with limiting retirement accounts to things that are trivially valued. There's a bunch of other folks that probably are not, though. There are some arguably insane get-rich-quick schemes built around some of the odder investments. (Oh, and the IRA holder ain't the one that gets rich quick.)
__________________
M Paquette is offline   Reply With Quote
Old 11-20-2014, 06:59 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by Gumby View Post
Easier said than done. The people who take advantage of these things have the incentive, the money and consequently the ear of congress critters to fight any such change.
Which is why now that I am no longer a regulator I mostly hunker down, ignore the media, and concentrate on where the metal (lead) meets the meat.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 11-21-2014, 07:46 AM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,485
Quote:
Originally Posted by george76 View Post
I agree completely.
+2
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is offline   Reply With Quote
Old 11-21-2014, 07:58 AM   #34
Thinks s/he gets paid by the post
Senator's Avatar
 
Join Date: Feb 2014
Location: Eagan, MN
Posts: 3,070
Quote:
Originally Posted by M Paquette View Post
No precious metal bullion? No private mortgages? No real estate ("I promise not to make personal use of it, mkay?") ? No interest in a private business?
Gold, Mortgage Notes and RE are publicly traded. You cannot have someone sell you gold at ~$1 an oz, and put it in your 401K.

Of course, maybe that is the way. Form a company, buy gold. Value the company shares at .000125. But the book value of the company is $1,000+ a share due to the gold. Put the shares in the Roth.

Then, liquidate the company.
__________________
FIRE no later than 7/5/2016 at 56 (done), securing '16 401K match (done), getting '15 401K match (done), LTI Bonus (done), Perf bonus (done), maxing out 401K (done), picking up 1,000 hours to get another year of pension (done), July 1st benefits (vacation day, healthcare) (done), July 4th holiday. 0 days left. (done) OFFICIALLY RETIRED 7/5/2016!!
Senator is offline   Reply With Quote
Old 11-21-2014, 08:04 AM   #35
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,492
In case anyone is interested, here's a link to the GAO report webpage U.S. GAO - Individual Retirement Accounts: IRS Could Bolster Enforcement on Multimillion Dollar Accounts, but More Direction from Congress Is Needed
__________________
MichaelB is offline   Reply With Quote
Old 11-21-2014, 08:22 AM   #36
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,441
Quote:
More Direction from Congress Is Needed

Well, this just became a non-issue.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 11-21-2014, 08:47 AM   #37
Thinks s/he gets paid by the post
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 3,849
Quote:
Originally Posted by gauss View Post
...
Perhaps they could structure it so that large conversion/withdrawals do not elevate you to a higher tax bracket.
...
Then you woke up!
__________________
sengsational is offline   Reply With Quote
Old 11-21-2014, 09:24 AM   #38
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
Quote:
Originally Posted by Hermit View Post
I read an in-depth article on accumulating such large dollars in an IRA. It can be done by people in the finance industry and it can all be legal. If we are going to throw stones at those who take legal approaches to minimize tax dollars and/or maximize government handouts benefits, most of us on this board better duck.
Suppose someone says:
"The wording of this law seems to conflict with the intent. This is demonstrated by the fact that some people are complying with the words but not the intent. Therefore, we should clean up the wording so that it matches the intent."

I wouldn't say that person is "throwing stones" at people.
__________________
Independent is offline   Reply With Quote
Old 11-21-2014, 10:29 AM   #39
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,709
$5 million today...in a few years, they'll have $500K considered 'excessive' and a few years after that, $100K.

Or is this another "by the year 1986, social security won't be available"?
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 11-21-2014, 10:30 AM   #40
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,709
Quote:
Originally Posted by Gumby View Post
Easier said than done. The people who take advantage of these things have the incentive, the money and consequently the ear of congress critters to fight any such change.
Thank goodness!
__________________

__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Need help in doing IRS form to report qualified Roth IRA distribution swampwiz FIRE and Money 5 12-08-2010 02:42 PM
Non-deductible IRA and 8086 IRS form - arrgh!! wilkens21 Young Dreamers 14 01-10-2008 06:13 PM
Can I max out my Roth IRA, Trad. IRA, and SIMPLE IRA? thefed FIRE and Money 9 09-24-2007 05:52 PM
Ruh-roh: Roth IRA conversions-- the IRS way. Nords FIRE and Money 14 06-03-2006 07:36 PM
Aint this sweet...IRS to allow tax preparers to sell your return data cute fuzzy bunny Other topics 2 03-21-2006 07:21 PM

 

 
All times are GMT -6. The time now is 05:07 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.