Your Tax-Free Nest Egg May Not Be Tax-Free After All

IBD Editorials ^ | April 23, 2012

[Mr. K]

gosh who could have seen that coming...!

[Kozak]

So, I and millions of others will no longer place a portion of our income in IRA.s or 401K’s, and will rush to withdraw what we have there as quickly as possible. That should work out GREAT for the market...... / sarc

[Kozak]

So, I and millions of others will no longer place a portion of our income in IRA.s or 401K’s, and will rush to withdraw what we have there as quickly as possible. That should work out GREAT for the market...... / sarc

[Past Your Eyes]

I’m glad I’m an old fart but I fear for my grandchildren. Maybe I can figure out a way to leave them something without the damn Democrats getting their filthy paws on it.

[MetaThought]

Actually 401Ks are probably fuelling the stock market bubble. Maybe it’s not such a bad thing to pop it after all. :P

[UnRuley1]

The 401k was NEVER a Tax-free investment It is a Tax deferred investment. The genius of this is that you pay tax on the money when you retire and you have very little tax deductions (no mortgage interest) so your tax rate goes UP! Nice deal for the IRS, bad deal for the taxpayer.
It is much better to pay tax today and have tax free income later. The Roth IRA does this, at least for now.

[Kozak]

They should do this right after they slash all government pensions ( except for military). / sarc

[Clintonfatigued]

If this happens, a lot of people may pull their money out of their retirement plans. How will that effect the economy and tax receipts?

[YankeeReb]

Eventually they'll be no such thing as retirement. It'll be work till you drop then you get to face the death panels.

In all seriousness for someone in an office type situation working to 70 may be an option, but for those of us who work in construction, retail , food service etc working into a ripe old age may not be an option.

[YankeeReb]

They should do this right after they slash all government pensions ( except for military). / sarc

Sadly, military pensions are the first ones they'll slash. Why? Simple, the military isn't unionized and they don't (as a rule) vote Democrat.

[Lurker]

The day they try to pull this is the day Lurker becomes a very, very dangerous man to certain people.

[ProudFossil]

There is always the good old banking action, i.e., put it in the mattress.

[UnRuley1]

You can leave some funds for your Grandkids, it is called INSURANCE proceeds. No, I don't sell insurance, I do have a life insurance license and have done my homework and have come to the realization that insurance proceeds are not taxable as they are not income, for now. If you have time, get some insurance and name the kids as beneficiaries. Then you don't have to worry about the stock market.

[palmer]

Before people rush to say that people will withdraw their 401k’s and tank the market, 401k withdrawals are taxed already and withdrawing now would be pointless. Eliminating the 401k deduction would be negative for certain market segments but might be positive for others. For example royalty trusts would become a royal pain outside of an IRA or 401k and lead to complicated and increased taxes. But people might still be inclined to invest in yield or growth stocks if there is still a somewhat favorable tax treatment.

[UnRuley1]

Pulling their money out of 401k accounts is EXACTLY what the IRS wants. That way the Feds can collect those juicy taxes PLUS 10% penalty!! Anyway you slice it the taxpayer gets screwed.

[UnRuley1]

Pulling their money out of 401k accounts is EXACTLY what the IRS wants. That way the Feds can collect those juicy taxes PLUS 10% penalty!! Anyway you slice it the taxpayer gets screwed.

[UnRuley1]

Pulling their money out of 401k accounts is EXACTLY what the IRS wants. That way the Feds can collect those juicy taxes PLUS 10% penalty!! Anyway you slice it the taxpayer gets screwed.

[UnRuley1]

Sorry for the multiple posts, I don’t know what happened.

[PGalt]

Eventually they'll be no such thing as retirement. It'll be work till you drop then you get to face the death panels.

Totalitarians have many tactics. Plunder and death are their stock and trade. Witness history and current events.