What Obama Budget might mean for Reitrees, Savers

[soccerluvof4]

More on the subject, For whats its worth.

http://blogs.marketwatch.com/encore/2014/02/21/obama-would-spare-social-security-curb-iras/ 

[ZMonet]

This isn't getting off the ground, which is why it is so vaguely worded and short in detail, but for argument sake it looks like it is $3 million+ per person, or $6 million+ for a couple.  With all the low hanging fruit, not sure why this would be the place to gain revenue, but I doubt many here would be impacted.
   
Prohibit Individuals from Accumulating
Over $3 Million in Tax-Preferred Retirement
Accounts
. Individual Retirement Accounts
and other tax-preferred savings vehicles are
intended to help middle class families save
for retirement. But under current rules,
some wealthy individuals are able to accu
-mulate many millions of dollars in these ac
-counts, substantially more than is needed to
fund reasonable levels of retirement saving.
The Budget would limit an individual’s total
balance across tax-preferred accounts to an
amount sufficient to finance an annuity of
not more than $205,000 per year in retire
-ment, or about $3 million for someone retir
-ing in 2013. This proposal would raise $9
billion over 10 years.

[griffin]

This isn't getting off the ground, which is why it is so vaguely worded and short in detail, but for argument sake it looks like it is $3 million+ per person, or $6 million+ for a couple.  With all the low hanging fruit, not sure why this would be the place to gain revenue, but I doubt many here would be impacted.

Yup, 3,000,000 at 4% is 120k a year...more than any self-respecting mustachian should need! I imagine most of us would be happily retired well before that point :)

[MDM]

Agree with previous posts.  Worth noting, however, that in 1913 the highest Federal Income tax rate was 7% and that was for annual income >$500K (again, in 1913!).  See http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets.

I'd feel much better if there remain no limits on retirement accounts, because once the governmental camel's nose is in the retirement account tent....

[soccerluvof4]

Agree with previous posts.  Worth noting, however, that in 1913 the highest Federal Income tax rate was 7% and that was for annual income >$500K (again, in 1913!).  See http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets.

I'd feel much better if there remain no limits on retirement accounts, because once the governmental camel's nose is in the retirement account tent....

Thats my biggest thing is your last sentence.

[Undecided]

Agree with previous posts.  Worth noting, however, that in 1913 the highest Federal Income tax rate was 7% and that was for annual income >$500K (again, in 1913!).  See http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets.

I'd feel much better if there remain no limits on retirement accounts, because once the governmental camel's nose is in the retirement account tent....

Thats my biggest thing is your last sentence.

Right, hate to let the government in to what is entirely a creature of the tax code. I assume you want it to keep its hands of your Medicare, too?

[iris lily]

Right, hate to let the government in to what is entirely a creature of the tax code. I assume you want it to keep its hands of your Medicare, too?

That's silly.  It's entirely reasonable to be leery of the growth of Nanny G  and her preoccupation with what is in our pockets.

It disgusts me that someone decides what a "reasonable level" of retirement is. Annoying as hell. F*ck that shit. But that said, that's what we get when we hire Nanny to do everything for us.

[Undecided]

Right, hate to let the government in to what is entirely a creature of the tax code. I assume you want it to keep its hands of your Medicare, too?

That's silly.  It's entirely reasonable to be leery of the growth of Nanny G  and her preoccupation with what is in our pockets.

It disgusts me that someone decides what a "reasonable level" of retirement is. Annoying as hell. F*ck that shit. But that said, that's what we get when we hire Nanny to do everything for us.

You can be a shrill opponent of whatever you want to oppose, but portraying the proposal first described above as the government getting its nose under the tent is ridiculous. I can't force you to read, and certainly not to understand, but if the tent is the ac-advantaged retirement accounts, the government is already entirely inside it, the government made the tent---they're already totally government creations. I dislike, but have no expectation that the proposal would go anywhere now.

[Undecided]

Agree with previous posts.  Worth noting, however, that in 1913 the highest Federal Income tax rate was 7% and that was for annual income >$500K (again, in 1913!).  See http://taxfoundation.org/article/us-federal-individual-income-tax-rates-history-1913-2013-nominal-and-inflation-adjusted-brackets.

I'd feel much better if there remain no limits on retirement accounts, because once the governmental camel's nose is in the retirement account tent....

Thats my biggest thing is your last sentence.

Right, hate to let the government in to what is entirely a creature of the tax code. I assume you want it to keep its hands of your Medicare, too?

Also, it's understandable why people facing this kind of IRA situation would be mad. The government literally encouraged them (via tax savings) to put money into these accounts, and is now considering an about face as the first large generation to really use these types of tax deferred investments comes of age. It's something of a bait and switch, no?

I believe Medicare will need to be reformed, but can't you see why Medicare recipients are angry?

The government should govern government programs for the benefit of the governed. If you rely on a government program of any sort, accept that there's a higher duty and a higher cause than your individual well-being. That's my point, this is already about government programs, and the argument that the government would only by this proposal (which appears to have little if any support) get its nose into the tent is absurd. It strikes me as blind, anti-Obama whining.

[Undecided]

Deciding that there is now a cap of "acceptable" IRA contributions before you're be facing new forms of taxation *is* setting a precedent. Period.

Despite your use of the always-convincing "[p]eriod" to prove something, I'm not convinced that you have any valid point here. I understand that you now want to argue about "setting a precedent" instead of my point that the government is already, inextricably involved in these programs. Of course, you know that there are already limits on these contributions, annually---there's your existing precedent. I think this would be a bad change, no doubt, but it's hardly the initial introduction of the "government" into these accounts. Saying otherwise is misleading.

[skyrefuge]

It disgusts me that someone decides what a "reasonable level" of retirement is. Annoying as hell. F*ck that shit.

I know, right? There's actually a site on the Internet where there's this asshole that bases almost his entire message on that concept. I caution you to never go there if you don't want your blood to boil!

[MDM]

because once the governmental camel's nose is in the retirement account tent

Undecided is absolutely correct that anything regarding tax policy already involves government, so I'm happy to stand corrected on the letter of my note above.

Perhaps a better analogy would be that, in the case of IRAs (and 401Ks and 529s) the government had walled off a limited portion of the tent, given people a certain opportunity (the contribution limits) to participate, then backed its camel self out and allowed people's investments to flourish or wither on their own.  This budget proposal then seems a way to reinsert the camel nose and penalize those whose investment performance "unfairly" exceeded others.

I don't think the problem is limited to Obama.  I'd have the same comments if Bush had done it or someone else would propose it in 2017, etc.  Good comments by others as well - thanks.

[SisterX]

It disgusts me that someone decides what a "reasonable level" of retirement is. Annoying as hell. F*ck that shit.

I know, right? There's actually a site on the Internet where there's this asshole that bases almost his entire message on that concept. I caution you to never go there if you don't want your blood to boil!

Lol!

[Undecided]

Deciding that there is now a cap of "acceptable" IRA contributions before you're be facing new forms of taxation *is* setting a precedent. Period.

Despite your use of the always-convincing "[p]eriod" to prove something, I'm not convinced that you have any valid point here. I understand that you now want to argue about "setting a precedent" instead of my point that the government is already, inextricably involved in these programs. Of course, you know that there are already limits on these contributions, annually---there's your existing precedent. I think this would be a bad change, no doubt, but it's hardly the initial introduction of the "government" into these accounts. Saying otherwise is misleading.

So, if the government signs into law a bill that all SNAP recipients have to pass monthly drug tests to continue receiving benefits, does this constitute something SNAP recipients ought to be fine with, even expect, as they are availing themselves of of a government program, or is it possibly a problematic precedent that might lead to the the government also cutting SNAP recipients off if they have more kids, or if they engage in other behaviors the state deems socially unacceptable? Of course, it's a precedent, because despite the fact that SNAP is a government program, it's never, ever included drug testing as a condition of receiving aid.

By the same token, the government has never, ever, declared a maximum your IRA is allowed to hold before you're subjected to different taxes. A maximum on tax-deductible contributions? Yes. A maximum on the amount you are allowed to have total before facing new taxes? No. That's unprecedented.

You can start to argue all sorts of other things, that's fine with me, but none of it has anything to do with my point about the absurdity of claiming that this "proposal" would be the first introduction of the government into the "tent" that is tax-advantaged savings. 

[grantmeaname]

So, if the government signs into law a bill that all SNAP recipients have to pass monthly drug tests to continue receiving benefits, does this constitute something SNAP recipients ought to be fine with, even expect, as they are availing themselves of of a government program, or is it possibly a problematic precedent that might lead to the the government also cutting SNAP recipients off if they have more kids, or if they engage in other behaviors the state deems socially unacceptable? Of course, it's a precedent, because despite the fact that SNAP is a government program, it's never, ever included drug testing as a condition of receiving aid.

'Not paying taxes' is not a civil liberty.

[grantmeaname]

Privacy, which is the exact analog to 'not paying taxes' in the story being discussed here, is a civil liberty. You're being obtuse.

[iris lily]

It disgusts me that someone decides what a "reasonable level" of retirement is. Annoying as hell. F*ck that shit.

I know, right? There's actually a site on the Internet where there's this asshole that bases almost his entire message on that concept. I caution you to never go there if you don't want your blood to boil!

ok, that made me laugh and I didn't even have to click the link to get it.

I think that the mustachian concept is "carefully consider what you really need to have a good time in retirement 'cause it's less than conventional wisdom" rather than some outsider (cough cough Nanny G)  telling you how much you are allowed to have.

But I think you knew that.  :)

[skyrefuge]

ok, that made me laugh and I didn't even have to click the link to get it.

Good. :-)

I think that the mustachian concept is "carefully consider what you really need to have a good time in retirement 'cause it's less than conventional wisdom" rather than some outsider (cough cough Nanny G)  telling you how much you are allowed to have.

But I think you knew that.  :)

Yeah, they definitely aren't the same, but MMM in his more face-punchy moments is actually quite opinionated on how much you're allowed to have. He has stated that a major secret purpose of his site is to promote global conservation and sustainability, and thus, he'd like to see some pretty strong limits on global consumption. Even if someone genuinely thinks they need to race monster trucks across the desert to have a good time in retirement, I bet he'd veto that one.

The real difference is that MMM, unlike the government, has no power of enforcement. So he instead uses the more noble (and perhaps more-effective, in the long term) power of persuasion to alter behavior.

Finally, even if this presidential proposal was to become law, it's in no way putting a limit on retirement assets. It's just limiting the portion of your assets that can be sheltered from taxation. The various limits already on tax-sheltered accounts indicate that the government has always designed them in a way to prevent an "unreasonable" amount from being sheltered. This would just be adding another fence that they didn't even realize was necessary until someone saw Mitt Romney's IRA.