Additional Contribution Caps on Tax-Preferred Retirement Accounts
Obama’s 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.” According to Matthew Hiemer’s back-of-the-envelope calculation in a MarketWatch post, this would affect around 100,000 American households.
This looks like pure politics to me. These 100,000 families won’t get much sympathy from regular folks. Any politician who opposes this proposal risks being labeled an elitist, and those who support it will crown themselves the champions of the poor… just as an election is coming up.
This is just another unwarranted attack on the rich who were successful enough to build up more than $3 million in their retirement accounts.
Money in a traditional IRA or 401(k) is nothing more than tax deferred. When it’s withdrawn, the government still gets its ever-increasing share. And there are mandatory withdrawals once a person reaches 70 ½ years old, so that money will be taxed eventually. The government sounds like a petulant child, screaming, “I want it now!”
What Should We Expect Next?
Over the course of the summer, political emotions will rise as both political parties take their stands. Then, at the last minute when all the hype has been milked, they will strike a convoluted compromise. Both parties will tell their constituents it was the best they could get, and ask for contributions so they can fix the mess after the next election.
“NONE OF THE ABOVE” won’t be seriously considered, and more wealth will be stolen from hard-working Americans, many of whom would never consider themselves wealthy to begin with.
In an attempt to limit any political hate mail, I offer this. I don’t want to hear a word about “fairness” until all elected federal officials scrap their retirement programs and put themselves under Social Security like the rest of us. Opensecrets.org reports that the average net worth of a Senator is $13.9 million and that of a member of the House is $6.5 million. Why should we pay for their fancy retirement and healthcare programs?
What Should You Do Now?
You’re probably thinking you want to contact your elected officials and let them know how you feel about this. I sure have, but I’ll leave that up to you; politics is not my area of expertise. However, managing my retirement finances and sharing my knowledge and strategies with my fellow seniors are exactly what I do. I’m one of you, a retiree who wanted answers.
I spent the bulk of my career teaching adults, and I know that complicated information can be taught in simple, easy-to –follow ways. You may feel differently, but all the geek talk we’re bombarded with just frustrates me. That’s why in articles like this one and in my Money Forever service we explain matters in plain English, so you won’t need to go out and get a Ph.D. in economics or finance to follow along.
I’m sure we have all told our children and grandchildren that an education is one thing that can never be taken away. In our case, a financial education can keep us independent and in the game, and in this case, protect us from the shenanigans of politicians.
I’d like for you to consider taking a look at Money Forever, it’s written by a senior (me!) for seniors. The current subscription rate is affordable – less than half that of a typical morning newspaper. The best part is you can take advantage of our 90-day, no-risk offer. If for some reason you find it’s just not for you, you can cancel for any reason (no questions asked) within the first 90 days to get all your money back and never be billed again. Period. But as you might expect, our cancellation rates are very low, and we aim to keep it that way.