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401K is tax deferred money that the Fed never got for decades.
Not all 401ks are tax-deferred.
Roth 401ks have existed for quite a while. My employer offered both traditional 401k and Roth 401k. High earners would utilize the Roth 401k to minimize taxes in retirement.
You aren't alone. There are people who believe eventually the govt will find those huge Roth deposits too tempting and will find a way to attempt to tax them. Lots of retirees with six figure retirement incomes plus very large retirement accounts. Income and means testing social security benefit payments for starters is one I've heard.
Sooner or later the govt may at least try.
I bring this out because what his says is very important to a lot of people here. So many follow his advice and teachings that he can actually shape events. The case in point her is recent changes as the article points out make it easy and even profitable to do Roth conversions on your traditional IRA. In the article it talks about that there is an increase in the amount of money in Roth now that wasn't there before. To me that is a "der" point. Of course since more and more people are using new laws to maximize retirement savings and avoid taxes as much as possible. I do not have a lot in Roth IRA or even in IRA. Much of my retirement savings is in 401k as most of you know is employer sponsored. In my household that is where I was able to put money away. Trying to get additional money to fund an IRA or even a Roth IRA was next to impossible. We are not the only people that would struggle with additional savings outside of employer sponsored programs. Most investment professionals will tell you that if your company offers that then by all means take advantage of it. What better way to make 100% interest on 5% of your pay if that is the match.
I just had to bring this out. Thanks mathjak for the Ed Slott recommendations. He is very good and his strategies are very sound.
i like ed a lot . he is one of the few tax advisors who really knows how to play the 2nd half of the game. i learned a lot from ed.
You aren't alone. There are people who believe eventually the govt will find those huge Roth deposits too tempting and will find a way to attempt to tax them. Lots of retirees with six figure retirement incomes plus very large retirement accounts. Income and means testing social security benefit payments for starters is one I've heard.
Sooner or later the govt may at least try.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,724 posts, read 58,067,115 times
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Quote:
Originally Posted by TuborgP
Bada Bing and the revolution begins
Careful... I'm in the midst of my first coup' here in Thailand (but number 12 for them).
I will see if I can pick up any hints for the future if USA retirees need to revolt.
My Roth's get my high risk / High return allocations. Maybe they will be of benefit... Maybe the Feds will get their mitts on Roth's.. (hope not, but I stay diversified in holdings and investment vehicles).
You never know what a government will do when they get nervous (or broke). I keep a reversible shirt handy... Red on one side, Yellow on the other.
You aren't alone. There are people who believe eventually the govt will find those huge Roth deposits too tempting and will find a way to attempt to tax them. Lots of retirees with six figure retirement incomes plus very large retirement accounts. Income and means testing social security benefit payments for starters is one I've heard.
Sooner or later the govt may at least try.
We need to vote out the liberals who tax and spend, and put financial conservatives in office that will let people keep the money they earned and saved.
Beginning in 2010, the tax law repealed the income restrictions on Roth IRA conversions allowing everyone to convert their IRAs to Roth IRAs regardless of their income. This brought higher income people into the Roth conversion arena with larger IRA balances to convert. These people also had the money to pay the conversion taxes.
This resulted in increased tax revenue from those doing the conversions. But instead of paying off the federal govt debt, it was spent on more entitlement programs, 3 years of unemployment payments, massive growth in disability spending, etc. I do worry when all that tax money that was pulled from the future has been spent. Wasn't the yearly federal budget deficit about $1 trillon dollars in 2010, 2011?
At this point, I don't see Roth IRA's being taxed in the future (yep, my crystal ball is about as clear as that of most investors). Proposals thus far include limiting the amount of funds that can be held in a Roth IRA and requiring distributions upon reaching a certain age. I'd also suggest that the government look into including Roth IRA distributions in calculating Adjusted Gross Income for purposes of taxing Social Security benefits.
The reason I don't foresee a direct taxation of Roth distributions is because the Millenials were raised on Roth IRAs. The original purpose of the IRA was to encourage those wage earners who did not have access to a retirement plan at work to set aside a relatively small amount of funds for retirement. Although the Roth has now morphed into a vehicle whereby the wealthy can pass huge sums of tax free money to their grandchildren, etc., I can't see the Average Joe agreeing to kill the Roth, just "tweaking" the rules to reflect the IRA's original purpose.
At this point, I don't see Roth IRA's being taxed in the future (yep, my crystal ball is about as clear as that of most investors). Proposals thus far include limiting the amount of funds that can be held in a Roth IRA and requiring distributions upon reaching a certain age. I'd also suggest that the government look into including Roth IRA distributions in calculating Adjusted Gross Income for purposes of taxing Social Security benefits.
The reason I don't foresee a direct taxation of Roth distributions is because the Millenials were raised on Roth IRAs. The original purpose of the IRA was to encourage those wage earners who did not have access to a retirement plan at work to set aside a relatively small amount of funds for retirement. Although the Roth has now morphed into a vehicle whereby the wealthy can pass huge sums of tax free money to their grandchildren, etc., I can't see the Average Joe agreeing to kill the Roth, just "tweaking" the rules to reflect the IRA's original purpose.
until the accountants figure out another end around.
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