Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 04-05-2013, 01:54 PM   #21
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,695
The statement says: "...substantially more than is needed to fund reasonable levels of retirement saving...”

So, with SS viability in question, how is a "reasonable" level of retirement savings determined? Is someone going to say: "we've figured it out and you have substantially more than you need?"
__________________

__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline  
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 04-05-2013, 02:07 PM   #22
Thinks s/he gets paid by the post
bUU's Avatar
 
Join Date: Dec 2012
Location: Georgia
Posts: 1,906
Well the rumor pegs their starting point in excess of five times FPL per year. I think that's a large enough cushion.
__________________

__________________
bUU is offline  
Old 04-05-2013, 02:12 PM   #23
Recycles dryer sheets
 
Join Date: Apr 2010
Posts: 269
Well, it would redefine maxing the 401(k).
__________________
Sesq is offline  
Old 04-05-2013, 02:14 PM   #24
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,695
Quote:
Originally Posted by bUU View Post
I think that's a large enough cushion.
I dunno. I'd like to think that I'm the best judge of how much money I want to live on. Maybe I got it wrong.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline  
Old 04-05-2013, 02:17 PM   #25
Thinks s/he gets paid by the post
bUU's Avatar
 
Join Date: Dec 2012
Location: Georgia
Posts: 1,906
Quote:
Originally Posted by marko View Post
I dunno. I'd like to think that I'm the best judge of how much money I want to live on.
I don't see anything there about determining how much money people are supposed to live on. It seems to be only about how much retirement savings can be tax-advantaged.
__________________
bUU is offline  
Old 04-05-2013, 02:25 PM   #26
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,629
Quote:
Originally Posted by hsv_climber View Post
The language of the proposal makes it sound like it is inflation-adjusted number, i.e. just like tax brackets, annual IRA limits, etc.
So, you don't need to worry about inflation.
Must respectfully DISagree. Proposal language can be VERY different from actual legislation/implementation. US has long history of NOT inflation-adjusting important tax-related items. Like traditional IRA contribution limit remaining at $2k from 1982-2001 vs inflation (cumulative) of ~180% (from US BLS inflation calc link below).
http://en.wikipedia.org/wiki/Individ...rement_Account
Or AMT's initial exemption of $30k remaining unchanged from 1969-1992 despite (cumulative) inflation of >380%.
Alternative Minimum Tax - Wikipedia, the free encyclopedia
Or personal exemption not rising during certain high inflation periods (e.g. remaining @ $1k from 1979-1984 despite 40+% CPI rise).
http://www.irs.gov/pub/irs-soi/02inpetr.pdf
FWIW- Handy link to US BLs inflation (CPI) calc-
http://www.bls.gov/bls/inflation.htm
__________________
ERhoosier is offline  
Old 04-05-2013, 02:34 PM   #27
Full time employment: Posting here.
Accidental Retiree's Avatar
 
Join Date: Feb 2012
Posts: 975
Quote:
Originally Posted by gauss View Post
I would imagine that the "Mortality Credits" would make up a significant part of the 6.8% vs a normal SWR. That is to say, once you buy the annuity, the insurance company keeps the money -- even if you die sooner than average. The funds from the deceased subsidize those who live longer.

-gauss
And maybe the reason ObGyn65 likes annuities?
__________________
Chief Retirement Strategist
The AR Group
Accidental Retiree is offline  
Old 04-05-2013, 02:38 PM   #28
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,695
Quote:
Originally Posted by bUU View Post
I don't see anything there about determining how much money people are supposed to live on. It seems to be only about how much retirement savings can be tax-advantaged.
Got it.
Of course, the flaw is forgetting that the wealthy always have options.

Cut off a tax benefit in one area and they'll just go in another direction. Financial whack-a-mole. That's one of the reasons they're wealthy.

This plan is less than 6 hours old and you can already hear the wheels turning. Makes everyone feel good though!
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline  
Old 04-05-2013, 02:39 PM   #29
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: 6,421
Quote:
Originally Posted by bUU View Post
Well the rumor pegs their starting point in excess of five times FPL per year. I think that's a large enough cushion.
Not even close. I have no plans to only be 5x richer than poor. Plus the federal poverty level is ridiculously low. I want the gov't out of my retirement planning even more than I want them out of my bedroom.

Also, I wonder what the plan is for people who invest in something and have it go through the roof, lifting their IRA balances past the limit. Would that require you to convert the difference to taxable? And if so, what about the next year? Once you're at the limit, if your investments grow faster than the CPI you'll go over every year, even without adding to the account. This doesn't sound very well thought out to me.
__________________
"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  
Old 04-05-2013, 02:51 PM   #30
Thinks s/he gets paid by the post
bUU's Avatar
 
Join Date: Dec 2012
Location: Georgia
Posts: 1,906
Quote:
Originally Posted by marko View Post
Of course, the flaw is forgetting that the wealthy always have options.
That is always a big concern. That's one of the reasons why these necessary measures need to have so much detail and measures of enforcement in them - aspects that often draw criticism (like the recent criticism of the 23? page application for ACA subsidy) - but your point about the tendency toward abuse makes clear that those criticism are without merit.


Quote:
Originally Posted by harley View Post
Not even close. I have no plans to only be 5x richer than poor.
Yet again: How much richer you plan to be isn't the issue. It's for how much of your retirement savings society benefits from offering you a tax-advantage. Tax laws aren't supposed to be crafted to each taxpayer's own personal benefit, but rather to address society's priorities and objectives. And one of the biggest objectives is reducing deficits, and one way to do that is by not granting tax deferral beyond that which is necessary to lead a reasonably comfortable retirement. It goes hand-in-glove with means-based taxation of social security benefits.

Quote:
Originally Posted by harley View Post
Plus the federal poverty level is ridiculously low.
That just underscores how much further out of balance the ability to afford retirement is, between rich and poor, than the current numbers make it look.

Quote:
Originally Posted by harley View Post
I want the gov't out of my retirement planning even more than I want them out of my bedroom.
Cutting off tax deferral at a certain point is exactly that... the government stepping back away from your retirement planning, after you no longer need their intersession as much as less affluent people need it.
__________________
bUU is offline  
Old 04-05-2013, 02:52 PM   #31
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,357
Tough to see practical restrictions other than a limit on additional IRA contribs, though I can imagine them inventing overly-complex rules for when an individual assumes ownership of a spouse's IRA upon the spouse's death.
__________________
GrayHare is offline  
Old 04-05-2013, 02:53 PM   #32
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 1,357
If they are so concerned about folks putting away "too much" in retirement accounts, wouldn't it make more sense to just "means test" for those with large retirement accounts for things like SS and Medicare?

Again it sends the message that saving/investing is bad. As as has been posted before, there has been a bad history of adjusting these things for inflation, because folks get used to the increasing tax stream it generates.
__________________
Current target FIRE date: Under negotiation, can happen anytime.
jollystomper is offline  
Old 04-05-2013, 02:53 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,964
Quote:
Originally Posted by donheff View Post
I expect that if something like this was implemented the $3M cap would simply be a limit that would block further tax differed additions to the account from current income. A limit that included growth within the account would be difficult to administer.
That's how I'm reading it too. It doesn't prevent anyone from accumulating more than $3M, it's simply a limit on tax deferred $. You can save all you want in taxable accounts, so it limits no one, it just caps deferring taxes. That doesn't seem unreasonable to me. YMMV

Home mortgage deductions aren't unlimited either.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline  
Old 04-05-2013, 02:54 PM   #34
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,412
So, is this a limit on how much people can save, is this a limit on how much income people can defer?
__________________
MichaelB is offline  
Old 04-05-2013, 02:56 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by hsv_climber View Post
Good point. But it does not cover all the plans, e.g. it does not cover 401Ks.
I know for solo 401Ks you have to start reporting the value annually tot he IRS once it exceeds $250K. Maybe the same holds true for "real" 401Ks. The form used is the Form 5500-EZ or Form 5500.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline  
Old 04-05-2013, 02:59 PM   #36
Thinks s/he gets paid by the post
Katsmeow's Avatar
 
Join Date: Jul 2009
Posts: 3,394
I see no indication that this limits how much you can save....just how much you can save in an IRA or 401(k). I don't actually have an issue with it.
__________________
Katsmeow is offline  
Old 04-05-2013, 03:01 PM   #37
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: 6,421
Quote:
Originally Posted by Katsmeow View Post
I see no indication that this limits how much you can save....just how much you can save in an IRA or 401(k). I don't actually have an issue with it.
The AMT was intended to hit 155 families when it was implemented. All I can say is...

Unintended Consequences
__________________
"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  
Old 04-05-2013, 03:02 PM   #38
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 3,695
Quote:
Originally Posted by jollystomper View Post
If they are so concerned about folks putting away "too much" in retirement accounts, wouldn't it make more sense to just "means test" for those with large retirement accounts for things like SS and Medicare?

Again it sends the message that saving/investing is bad. As as has been posted before, there has been a bad history of adjusting these things for inflation, because folks get used to the increasing tax stream it generates.
I expect that means testing for SS is around the corner in addition to this plan.

Saving/investing isn't 'bad', but in hindsight with all that's going on, I just wish I had burnt through a lot more money in my younger days.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline  
Old 04-05-2013, 03:04 PM   #39
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 2,357
If a $3m cap applies to 401ks as well, then employers would need to be told "Don't contribute further to my account" which could lead to gravevine whispers as to which employees have more than $3m saved up.
__________________
GrayHare is offline  
Old 04-05-2013, 03:07 PM   #40
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by MichaelB View Post
So, . . .is this a limit on how much income people can defer?
Sounds like it, but only very roughly. Since it is a cap on allowed tax-deferred account size, a person who has really good investment results in these accounts gets to defer less income than someone who had poor returns.
I think the intent is to do an indirect cap on the income stream from tax deferred accounts. Once a person has "enough" to fund such an income stream, then the rest of the nest egg is subject to taxation.

The "enough" part is a theme we've heard before. The theme resonates with some, but does not bode well for anyone who is dependent on the productivity of others, and that's just about everyone (rich or poor). Productivity is what pays those stock dividends, repays those bonds, and even pays the taxes.
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is offline  
Closed Thread


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


 

 
All times are GMT -6. The time now is 04:21 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.