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IRS is looking at your largeish IRA
11-20-2014, 11:03 AM
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#1
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,671
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IRS is looking at your largeish IRA
As I have long expected, the feds are getting itchy about all of that money that you have stashed in your IRA.
Quote:
In 2014, the federal government will forgo an estimated $17.45 billion in tax revenue from IRAs, which Congress created to ensure equitable tax treatment for those not covered by employer-sponsored retirement plans. Congress limited annual contributions to IRAs to prevent the tax-favored accumulation of unduly large balances, the GAO noted. But concerns have been raised about whether the tax incentives encourage new or additional saving. Congress is re-examining retirement tax incentives as part of tax reform. The GAO was asked to measure IRA balances and assess IRS enforcement of IRA laws.
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http://www.financial-planning.com/ne...8a%3A&st=email
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Part-Owner of Texas
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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11-20-2014, 11:12 AM
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#2
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,199
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So that's around 1% of total tax revenue, right? Not enough to justify any major changes, I think.
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11-20-2014, 11:16 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,671
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1% of the federal revenue is probably a lot of money. Just sayin...
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Part-Owner of Texas
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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11-20-2014, 11:32 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Since I don't have a $100MM IRA, I will not spend a lot of time sweating this one...
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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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11-20-2014, 11:35 AM
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#5
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Full time employment: Posting here.
Join Date: Sep 2014
Posts: 645
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The problem isn't tIRAs, but Roth IRAs. The taxable accounts will defer the tax for many years, but will eventually convert long term capital gains into ordinary income. The mega IRAs will have mega RMDs which will be taxed at high rates. The Roth IRAs however are the "problem" as the long term capital gains are converted into tax free income!
Congress and therefore the IRS, look at shorter term revenue affects of their actions. In theory, the IRA will generate net revenues as the capital gains are turned into ordinary income. The problem is that the conversion is deferred too far into the future to get included in the CBO scoring of tax bills. Roth IRAs were a net revenue gain when passed since the tax was collected up front. Now that Congress has spent that money, they want to collect on the back end as well.
We are all to blame as w keep electing these people!
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11-20-2014, 11:40 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,671
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Quote:
We are all to blame as w keep electing these people!
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We the people are all learning how powerful a pen and a phone can be.
__________________
Part-Owner of Texas
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
In dire need of: faster horses, younger woman, older whiskey, more money.
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11-20-2014, 11:49 AM
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#7
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Full time employment: Posting here.
Join Date: Sep 2014
Posts: 645
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Did we just cross into politics?
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11-20-2014, 11:54 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Apr 2012
Location: Nashville
Posts: 2,504
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Quote:
Originally Posted by brewer12345
Since I don't have a $100MM IRA, I will not spend a lot of time sweating this one...
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The problem is that they won't stop there. See the AMT....
The proposal previously floated by the administration would have foreclosed DW from contributing to 401k--and she also is a couple of orders of magnitude from 100MM.
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OMY * 3 2ish Done 7.28.17
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11-20-2014, 12:01 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2012
Location: Seattle
Posts: 6,008
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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).
I am a bit sad we will ER before really getting long term use of the mega Roth. It would have been nice to have a few million in a Roth when you hit official retirement age.
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11-20-2014, 12:04 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,594
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Other than ferreting out illegal transactions, is the concern that high balance IRA holders may have future contributions limited or that there may be some type of excise tax on existing balances?
-gauss
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11-20-2014, 12:06 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
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Quote:
Originally Posted by Fermion
I am a bit sad we will ER before really getting long term use of the mega Roth. It would have been nice to have a few million in a Roth when you hit official retirement age.
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Would be nice to have a few million in ANY account...
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Have Funds, Will Retire
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11-20-2014, 12:09 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
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Hey, maybe we'll get lump sum deals from the feds to get our money out of the IRA's. Just like all the annuity buyouts being offered. Take it all out now and save 10% of the taxes or something.
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11-20-2014, 12:14 PM
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#13
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Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,594
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Quote:
Originally Posted by Animorph
Hey, maybe we'll get lump sum deals from the feds to get our money out of the IRA's. Just like all the annuity buyouts being offered. Take it all out now and save 10% of the taxes or something.
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+1 I like a sale.
Perhaps they could structure it so that large conversion/withdrawals do not elevate you to a higher tax bracket.
-gauss
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11-20-2014, 12:22 PM
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#14
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 4,337
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This isn't intended to be a political comment. I'm intending to provide some historical insight on what our wonderful elected leaders have done/could do to raise money.
During the Depression there was a very high "retained earnings tax" that crippled small businesses and depressed their ability to accumulate capital for investment.
When SS was implemented, it hit people and companies with several years of contributions before anyone was eligible for any benefits (it was always a pay as you go system).
Tax rates were routinely increased at all levels. I can't remember where it topped out before WWII but I think it was 85%. It got higher during WWII. There were calls to tax income at 100% above $25,000/yr. Collecting SS out of people's paychecks was so good for the government they decided to "help" people plan for paying their taxes by including withholding for income taxes.
The proposed Obama budget includes speedup withdrawls from inherited IRAs and Roth IRAs. The goal is increased and earlier tax revenue. I have no comments about whether this is good or bad and I don't wish to hear yours.
I don't want this to be taken as anything other than there is no bounds to the desire of any beauracracy to increase the intake of tax revenue.
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The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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11-20-2014, 12:24 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
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Quote:
Originally Posted by mickeyd
We the people are all learning how powerful a pen and a phone can be.
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My feeling is that the phone and the pen are worthless. The GAO is encouraging the IRS to do something. If I write to congressman Bob or senator Sam they won't dare cross either or those entities. The outcome will be that the IRS aims at the guy with the mega millions, but will end up costing me more in taxes.
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11-20-2014, 12:27 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 4,337
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Quote:
Originally Posted by target2019
My feeling is that the phone and the pen are worthless. The GAO is encouraging the IRS to do something. If I write to congressman Bob or senator Sam they won't dare cross either or those entities. The outcome will be that the IRS aims at the guy with the mega millions, but will end up costing me more in taxes.
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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?
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The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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11-20-2014, 01:18 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2012
Location: Seattle
Posts: 6,008
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There is always money in the banana stand.
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11-20-2014, 02:08 PM
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#18
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Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 2,223
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Quote:
Originally Posted by Taxman59
Did we just cross into politics?
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Yes , however , I don't think you can separate the two from this discussion
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" A person is smart, but People are dumb, dangerous, panicky animals, and you know it " Agent "K", Men in Black
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11-20-2014, 02:14 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Oct 2006
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11-20-2014, 02:18 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 17,173
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Shouldn't the subject be "Congress is looking at your largeish IRA"??
Why blame the dummy, when the ventriloquist is in control?
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Comparison is the thief of joy
The worst decisions are usually made in times of anger and impatience.
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