IRS is looking at your largeish IRA

[Hermit]

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.

 

[Bestwifeever]

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.

 

[meierlde]

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.

 

[george76]

Even easier: do not allow non-publicly traded/registered securities to be put in IRAs. End of problem.

I agree completely.

 

[Gumby]

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.

 

[M Paquette]

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.)

 

[brewer12345]

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.

 

[pb4uski]

I agree completely.

+2

 

[Senator]

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.

 

[MichaelB]

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

 

[harley]

More Direction from Congress Is Needed

Well, this just became a non-issue.

 

[sengsational]

...
Perhaps they could structure it so that large conversion/withdrawals do not elevate you to a higher tax bracket.
...

Then you woke up!

 

[Independent]

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.

 

[marko]

$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"?

 

[marko]

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!

 

[harley]

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.

If I had enough money I wouldn't mind a necklace of congressmen's ears.

 

[jazz4cash]

They might limit the mega backdoor Roth IRA thing some of us are now doing (shoveling $25,000 to $30,000 into a Roth tax free every year) but I doubt they would ever change the way the Roth works on distribution (tax free)......

Is that accurate? I thought you paid the tax up front at the time of the conversion.

 

[Fermion]

Is that accurate? I thought you paid the tax up front at the time of the conversion.

You pay tax on any gains, but it is called an in plan conversion and you pretty much pay no tax (note the money goes into the 401k after tax so there was tax paid at some point).

Essentially it is like this:

Normal folks: $17,500 into 401K, $5500 into Roth

Lucky folks: $17,500 into 401K, $20,000 or more into 401K after tax -> immediately converted to Roth, $5500 into Roth.