USA Accounts

[Ders]

With Republicans moving onto tax reform I came across this article. A quick synopsis is that they want to shift people to ROTH IRA accounts to increase tax revenue. But what caught my attention was the introduction of a new savings account called the USA account which works like a ROTH but with no penalties!

http://www.wealthmanagement.com/retirement-planning/will-republicans-fund-tax-cuts-tapping-retirement-piggy-bank?NL=WM-27&Issue=WM-27_20170331_WM-27_439&sfvc4enews=42&cl=article_3&utm_rid=CPG09000010891138&utm_campaign=8938&utm_medium=email&elq2=f37ca57102fe441995bbc489f0bcca05

Thoughts? Would definitely change up a early retiree's plan.

[TheAnonOne]

Seems overall negative, capping 401k deductions to 8k would be basically a massive tax increase on the savers.

Disallowing regular IRA contributions would be a massive tax increase on the savers who are on the low income side (making over 120k or so stops the deduction)

The 'universal savings account' is kind of cool? It's litterally just another roth, but in the face of losing $10,000 worth of deductions, it seems like peanuts.

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[Ocinfo]

Negative, just negative. I've also seen that Ryan's tax proposal will very slightly cut taxes for households under ~$75k, then raise taxes for households up to $250k, then drastically cut taxes for those making more. I'm curious if this retirement change BS was included. I don't mind paying a bit more in tax (I'm in the upper range of those set to be screwed) but not so those making significantly more can get a tax cut.


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[trollwithamustache]

meh, this story/idea has been out there for a long time.

A big chunk of USA wage earners don't pay income tax because they don't make enough. They aren't contributing to 401ks.(and separate problem, probably don't have access to one!) Statistically speaking, most of people contributing to their 401ks are relatively affluent. Its pretty easy to zazzle up some numbers that make 401ks look like a big tax dodge for the rich and voila! you should tax it.

how politically realistic or suicidal this might be is unknown since they haven't t actually tried it. 

[Sibley]

Given what happened with health care, I wouldn't hold your breath that they'll get anything done.