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- Apr 14, 2006
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As far as I can see, this merely stops the preferential tax treatment for those who exceed the $3 million, and then only for the amount above that limit. You can still save all you want on an after tax basis.
Is it really worth such angst? Suppose you have $3 million in an IRA that you rolled over from a 401k when you retired. Under current law, any withdrawal will be taxed. The only tax break is deferring taxes on the earnings, which you will presumably eventually withdraw and be taxed on. Now, you'll have to pay the taxes on a current basis.
I suppose those still in the accumulation stage might prefer to be able to continue contributions to a 401k, but sooner or later, you're going to have to pay taxes on those contributions. This just makes it sooner.
And, frankly, if you've amassed $3 million in your IRA, it's unlikely you need the continued tax breaks as a carrot to get you to save for retirement, which I believe was the original intention of the law setting up 401k's and IRAs.
So perhaps a deep breath is in order?
Is it really worth such angst? Suppose you have $3 million in an IRA that you rolled over from a 401k when you retired. Under current law, any withdrawal will be taxed. The only tax break is deferring taxes on the earnings, which you will presumably eventually withdraw and be taxed on. Now, you'll have to pay the taxes on a current basis.
I suppose those still in the accumulation stage might prefer to be able to continue contributions to a 401k, but sooner or later, you're going to have to pay taxes on those contributions. This just makes it sooner.
And, frankly, if you've amassed $3 million in your IRA, it's unlikely you need the continued tax breaks as a carrot to get you to save for retirement, which I believe was the original intention of the law setting up 401k's and IRAs.
So perhaps a deep breath is in order?