Posted on 04/11/2011 5:48:39 PM PDT by WeatherGuy
The day after Congress passed the new healthcare law, an opponent called it "a fiscal Frankenstein." In fact, those are fitting words for Roth individual retirement accounts, or IRAs. Roths drive up the federal deficit and cause other pain. They're great for holders but grim for America. It's time to retire them.
In a Roth, taxes are treated the other way around. There's no tax break on contributions. But from that point on, taxes simply vanish. As long as the account is at least 5 years old, there is no tax on any withdrawals made after age 59 1/2. There's no requirement that you make a minimum withdrawal — after age 70 1/2, or ever.
All of which makes Roths a perfect "fiscal Frankenstein." In return for little more than ordinary upfront taxes, Congress waived untold billions in future Treasury receipts. Then, too, Roths could be a drag on the U.S. economy. Since no withdrawals are required, assets can lie idle indefinitely.
For Roth holders, the accounts become a permanent, federally sanctioned tax shelter. For America, they're a bit like toxic instruments on the nation's books. Worse, Congress has them on steroids, and President Obama wants to up the dosage.
(Excerpt) Read more at latimes.com ...
Good!
Unfortunately tax rates are probably going to be twice as high when we finally withdraw our money from our IRAs and 401ks. And there will be a VAT tax on top of it all.
I think everyone will be scratching their heads wondering why we all decided to pay taxes later instead of years earlier, when the tax rates were lower.
I've never been willing to do a Roth because I figured it was a tax trap - that they'd start taxing withdrawals. I may have missed out on a good thing, but I don't trust the politicians.
More likely what they will do is require a "small" percentage of IRA and 401ks be put into government bonds or other "socially responsible" investments. After all, since the government is letting us have so much it wouldn't be that big of deal that they get to control 10% (or 25% or 50%) of our investments in tax deferred accounts. < /major sarcasm> Seriously, I fear that that they will start finding a way to either nibble away at it with bad investment choices or convince people to bail out and pay the taxes on early withdrawals.
This ultimately is what I think will happen as well.
The tax rates will only be going up, not down, for the foreseeable future. The ‘your tax rate will be lower’ ruse didn’t come with a guarantee.
The writer needs to watch “It’s a Wonderful Life” again.
“Aw com’n Harvey. It’s not like all the money is lieing in the vault there. Your money was used to build Tom’s house, and Tom’s money was used to build Joe’s.” (Or somesuch)
What these blithering idiots don't realize -- or want to admit -- is that assets "lying idle" actually are investments that put people to work.
These blithering idiots are gloaking at our funds.....
There is no argument or debate, period. This idiot wants the government to have your money. It is theft. And the left thinks they are entitled to it.
Only a liberal idiot defines an asset as idle just because government can't get their hands on it.
Yeah, someone has extra money laying around so they must be rich and be forced to share. The government set up retirements accounts, was it just to siphon off the money and confiscate it in the future?
The original intent was to give corporate executives a tax break by using a deferred compensation plan to shelter some income.
“In return for little more than ordinary upfront taxes”
Little more than ordinary taxes?
This whole political/ruling elite bunch can KISS MY A%%!
EXACTLY my thoughts.
My husband agrees with you. He’s always been skeptical of Roth’s and the ability of the gubmint to not turn around and tax them.
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