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Retirement account caps
Old 03-10-2014, 02:48 PM   #1
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Retirement account caps

I've been reading about the proposed federal cap on how much a person can have in all of their tax-favored retirement plans so they don't get too much in retirement. Since there are already limits on what can contributed, and since all the tax deferred money is eventually taxed when distributed, what's the point? It seems contrary to all the talk about how everyone needs to save more for retirement.
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Old 03-10-2014, 03:07 PM   #2
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Old 03-10-2014, 03:07 PM   #3
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Where have you been reading this? Link, please.
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Old 03-10-2014, 03:16 PM   #4
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Where have you been reading this? Link, please.
Right here on this site
How does budget proposal affect retirement accounts

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Old 03-10-2014, 03:29 PM   #5
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I suppose there are many reasons. One would be control, this govt is all about control over the past few administrations but wickly so with the current. Another would be that tax favored are tax deferred or tax free and the govt wants that money in a taxable vehicle. Why wait until everyone is 70 1/2 for RMDs when you can tax their money every year. Another may be just to punish the "wealthy" you know people like us here. I suppose there could be more but off the top of my head these come to mind.
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Old 03-10-2014, 03:30 PM   #6
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+1. I knew we'd already been through this discussion once (including the current revenue vs deferred revenue issue), but nothing wrong with having another. Something will have to give with entitlements sooner or later, we can't be 'up in arms' every time there's ANY proposed change.
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Old 03-10-2014, 03:30 PM   #7
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Similar to last year's proposal (that Alan linked above). It's been re-introduced this year:

http://www.theslottreport.com/2014/0...ludes.html?m=1
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Old 03-10-2014, 10:15 PM   #8
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Unless I read the proposal incorrectly, the cap would be 3.2 million. A spouse could have another 3.2 million. That's unreasonable?
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Old 03-10-2014, 10:38 PM   #9
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This sounds exactly like the AMT when they were introducing it. There were a handful of people who got lucky/exploited some loopholes to take advantage of tax shelters and the government came out to "get" them. Given the retirement crises that's about to hit this nation I'm not sure I would expect to see this ever happening if nothing but for the simple fact its way to complicated to keep track of. I.E. multiple accounts, employers, massive market fluctuations, etc...

I'm personally more worried about a cap in the amount of tax deductive contributions per year rather than the total amount that can be placed contributed via a $3.2 million dollar limit. But given how efficient and focused our government is... nothing would surprise me...
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Old 03-11-2014, 08:03 AM   #10
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I doubt we'd ever be subject to the cap, but even if we were I think it would be a fair change to implement to address the retirement crisis. It is something that will definitely be a really big problem that will have to be addressed, somehow, and capping retirement contributions like this is just about the least harm-causing way I can think of.
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Old 03-11-2014, 08:49 AM   #11
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Unless I read the proposal incorrectly, the cap would be 3.2 million. A spouse could have another 3.2 million. That's unreasonable?
Just a proposal with NO cap on how much one can put aside, only on how much can be in sheltered accounts. It won't pass anytime soon if ever, but what's a better option?
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Old 03-11-2014, 03:38 PM   #12
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Unless I read the proposal incorrectly, the cap would be 3.2 million. A spouse could have another 3.2 million. That's unreasonable?

Uh well that is a high value but I'd counter WHY should there be any cap whether $3.2 M or $3.2B? The govt needs to stay out of your business period. What's next they'll tell you the kind of car you can drive? Or how about how many oz your big gulp soda can be. Oh right that ones been played huh!
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Old 03-11-2014, 08:56 PM   #13
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A thread mercifully ended by Porky
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Old 03-11-2014, 10:15 PM   #14
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The cap would have too be much lower to affect me... :-P

I think a cap on tax-deferred accounts is a reasonable idea.
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Old 03-11-2014, 10:47 PM   #15
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The problem is some certain people can shift A LOT of money into retirement accounts...tens of millions.

Then there are all of those goofy rules about stepped up basis inheriting a IRA...makes no sense.
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Old 03-12-2014, 03:59 AM   #16
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Uh well that is a high value but I'd counter WHY should there be any cap whether $3.2 M or $3.2B? The govt needs to stay out of your business period.
How much income that you've derived from society's economy which you shelter from taxation by society is society's business.
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Old 03-12-2014, 05:45 AM   #17
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There's already HCE restrictions on the worker bees...have no problem with the Romney rule.
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Old 03-12-2014, 08:10 AM   #18
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Then there are all of those goofy rules about stepped up basis inheriting a IRA...makes no sense.
I don't understand this. Could you explain?

Money withdrawn from an IRA is taxed at ordinary rates, so we can't take advantage of the capital gains exclusions rules.

I haven't inherited an IRA but can't see how one of those would be any different.

What might I be missing?
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Old 03-12-2014, 08:11 AM   #19
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How much income that you've derived from society's economy which you shelter from taxation by society is society's business.
+1.
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Old 03-12-2014, 09:30 AM   #20
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I don't understand this. Could you explain?

Money withdrawn from an IRA is taxed at ordinary rates, so we can't take advantage of the capital gains exclusions rules.

I haven't inherited an IRA but can't see how one of those would be any different.

What might I be missing?
Oh I was wrong sorry. I thought IRA gets a step up in basis but it doesn't. Other assets do. I will never inherit a dime so haven't dug deep into that information.
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