Tax bill would do long-term damage to IRAs and retirement savings

[colfax_m]

I’m not talking about 9 figures. I am talking about 7 figures.

I know. And people with 7 figures are unaffected.

The question is how people manage to get so much money in their IRAs. The answer is loopholes. Dems are trying to close them.

 

[Thinker101]

So? It only added reporting requirements to $2.5 million accounts.

Ever wonder how some rich people manage to get IRAs that are 9 figures?

You obviously have no clue on the guidelines for IRA's.

 

[Indeependent]

I know. And people with 7 figures are unaffected.

The question is how people manage to get so much money in their IRAs. The answer is loopholes. Dems are trying to close them.

Welfare is the method to close loopholes?!!!!!!!!!!!!!!!!!!

 

[colfax_m]

You obviously have no clue on the guidelines for IRA's.

I know quite a bit. What do you think I’m getting wrong here?

 

[colfax_m]

You poor poor ignorant fool, you expect specifics and you counter with nonsense.

This article is propaganda. It’s trying to scare you. It’s leaving out specifics because if they included the specifics, it would be a lot less scary. In fact, you might agree with the bill.

And that would be bad for the rich elitists so we can’t have that.

 

[Thinker101]

I know quite a bit. What do you think I’m getting wrong here?

If you make more than $71,000 ($118,000 for married couples filing joint tax returns), you lose the ability to deduct IRA contributions from income taxes. With the biggest tax advantage of traditional IRAs eliminated, most households above this cutoff are better off investing in a Roth IRA instead.

Then when a worker's income reaches $132,000 ($194,000 for couples), they lose the ability to make Roth IRA contributions. Until 2010, people too rich to contribute to a Roth IRA just had to live with getting a smaller tax benefit from a traditional IRA.

 

[Lisa558]

If you make more than $71,000 ($118,000 for married couples filing joint tax returns), you lose the ability to deduct IRA contributions from income taxes. With the biggest tax advantage of traditional IRAs eliminated, most households above this cutoff are better off investing in a Roth IRA instead.

Then when a worker's income reaches $132,000 ($194,000 for couples), they lose the ability to make Roth IRA contributions. Until 2010, people too rich to contribute to a Roth IRA just had to live with getting a smaller tax benefit from a traditional IRA.

Yikes. The Dems sure do want to discourage people from being responsible and saving for retirement. They WANT people to end up on the government dole.

Seems Dems want as many people on welfare as possible.

 

[colfax_m]

If you make more than $71,000 ($118,000 for married couples filing joint tax returns), you lose the ability to deduct IRA contributions from income taxes. With the biggest tax advantage of traditional IRAs eliminated, most households above this cutoff are better off investing in a Roth IRA instead.

Then when a worker's income reaches $132,000 ($194,000 for couples), they lose the ability to make Roth IRA contributions. Until 2010, people too rich to contribute to a Roth IRA just had to live with getting a smaller tax benefit from a traditional IRA.

That’s where the traditional to Roth conversion comes in that the article alludes to.

See, you can contribute to a traditional IRA no matter what your income. No, you don’t get a tax deduction, but that’s not the point. You can then convert your traditional IRA into a Roth IRA. Since there’s no income limits to doing a conversion, wealthy people who couldn’t contribute directly to a Roth get to fund their accounts by putting it into a traditional IRA and converting it to a Roth. It’s known as a back door Roth.

It’s a loophole they opened in like 2005. Dems are talking about ending these conversions for people who make $400k or more (based on the last thing I read).

 

[Dekster]

For the first time, Congress would be changing the retirement savings rules in the middle of the game. Democrats would be banning long-established savings practices people have relied on for years to plan their retirement. These provisions would cap the total amount a person can save with tax benefits, force some people to reduce their savings, and prohibit many savers from using the common practice of converting from a traditional IRA to a Roth IRA.

Regurgitating the over the top rhetoric doesn't offer anything new. The BBB Act, if enacted into law, would require reporting to the IRS of any of these accounts that have over $2.5M in them and they would not be capped until $10M if not a roth IRA. That cap only applies to additional contributions by the taxpayer. It does not apply to additional contributions by employers. In addition the only "retroactive" change is the changing of the statute of limitations from 3 years to 6 years to collect taxes related to penalized or failed IRA's. With Roth IRA's the cap is $20M before you hit the required minimum distributions floor. That is not a situation most average Joe's will ever have to deal with.

 

[excalibur]

The bill also has tax hikes in the poor and middle class, and tax cuts for the rich.

But Dimtard Lemmings will support it.

Yes, the leftoids really are that stupid. Sadly, they can vote.

 

[Thinker101]

That’s where the traditional to Roth conversion comes in that the article alludes to.

See, you can contribute to a traditional IRA no matter what your income. No, you don’t get a tax deduction, but that’s not the point. You can then convert your traditional IRA into a Roth IRA. Since there’s no income limits to doing a conversion, wealthy people who couldn’t contribute directly to a Roth get to fund their accounts by putting it into a traditional IRA and converting it to a Roth. It’s known as a back door Roth.

It’s a loophole they opened in like 2005. Dems are talking about ending these conversions for people who make $400k or more (based on the last thing I read).

And again, here is where you don't have a clue, if there's no tax deduction, there's no point in getting a traditional IRA.

 

[colfax_m]

And again, here is where you don't have a clue, if there's no tax deduction, there's no point in getting a traditional IRA.

The point is to convert it to a Roth IRA because you make too much money to contribute directly to a Roth IRA.

You are the one without a clue.

 

[Thinker101]

The point is to convert it to a Roth IRA because you make too much money to contribute directly to a Roth IRA.

You are the one without a clue.

So you're saying these "rich people" contribute the maximum $6000, or $7000 depending on age, to a non-deductible IRA so they can transfer that money to a Roth IRA. I can tell ya that annual amount is not worth the effort.

 

[colfax_m]

So you're saying these "rich people" contribute the maximum $6000, or $7000 depending on age, to a non-deductible IRA so they can transfer that money to a Roth IRA. I can tell ya that annual amount is not worth the effort.

Oh but it is. That’s step one. Get a modest amount of money into an account that will never accrue taxes.

Step two is go to your private finance buddies. Use that money to buy dirt cheap investments not available to public. The the company goes public and suddenly you have a return of 100 to 1000. Not percent, multiple. Tens or hundreds of millions of dollars from a small investment. Some people, who shouldn’t be able to put any money in a Roth, can get in excess of $100 million tax free.

And by some people, I mean the most elite wealthy individuals. Not average people.

 

[Thinker101]

Oh but it is. That’s step one. Get a modest amount of money into an account that will never accrue taxes.

Step two is go to your private finance buddies. Use that money to buy dirt cheap investments not available to public. The the company goes public and suddenly you have a return of 100 to 1000. Not percent, multiple. Tens or hundreds of millions of dollars from a small investment. Some people, who shouldn’t be able to put any money in a Roth, can get in excess of $100 million tax free.

And by some people, I mean the most elite wealthy individuals. Not average people.

For Christ sake, you have quite the imagination. Not that step two doesn't happen, it's just not done with Roth IRA funds.

 

[colfax_m]

For Christ sake, you have quite the imagination. Not that step two doesn't happen, it's just not done with Roth IRA funds.

What makes you so sure? I doubt you are familiar with the shenanigans of the wealthy.

 

[Colin norris]

Provisions would have a major impact on how millions of people plan their retirement savings. Yet these far-reaching changes were added to the bill in secret, without any congressional hearings or public comment. New rules could apply to millions of households, including 37 million with traditional IRAs, 26 million with Roth IRAs, and 60 million 401(k) participants.

These provisions would cap the total amount a person can save with tax benefits, force some people to reduce their savings, and prohibit many savers from using the common practice of converting from a traditional IRA to a Roth IRA.

House tax bill would do long-term damage to IRAs and retirement savings

It was not done in secret if it was passed by the house.

 

[HenryBHough]

Do not be surprised when a wealth tax is introduced to immediately take away 25% of what you have in savings of any kind. True, it will start with only 0.5% but since there won't be any inconvenient elections in our virus-ridden future your wrath will be but a very efficient fertilizer.