Some House Democrats are attempting to hamstring Individual Retirement Accounts with new taxes and regulations. Among the numerous complicated new provisions, they would limit contributions from those filing jointly with taxable income over $450,000.
Since 1997, Americans have bolstered retirement funds with Roth IRAs. They are accounts on which you use after-tax income for investments that, upon withdrawal, are tax free. They received bipartisan support on passage.
The new proposed regulation would be limited to $225,000 per individual. That’s on top of taxes paid before the investment even was made. Above that threshold, the tax rate upon withdrawal would hit at 39.6 percent. Throw in the various state taxes and the amount would rise above 50 percent.
This could impact small business owners greatly as well as those making decent professional incomes. Additional taxes on income and investments for the future could mean less money invested back into the economy long term. Some questions on the impact this could have on the incentive for financial achievement could arise. States that are notorious for being high-tax, such as California, could continue to see a population decline if the path to IRA regulations continues.
In August, the Social Security Administration reported its Trust Find will be “depleted” by 2033. Still in the wake of this announcement, lawmakers seek heavy restrictions and reforms on Roth IRAs, Traditional IRAs, Spousal IRAs and Fixed Annuities. Such retirement accounts are crucial to relieve pressure on Social Security as reforms are made.