If you’ve played the game by the rules and saved money in your 401(k) and IRA, get ready. The government is ready to deliver more new taxes… on retirement accounts.
You heard me correctly.
Four years ago, I heard rumors that the government was looking for ways to get into our IRAs and 401(k)s to tap into the mountain of assets, in much the same way they spent the cash that was in the Social Security Trust Fund.
A Market Watch article from last week stated we all – yes, the rich and the poor – should prepare now for these new taxes.
You didn’t think all that “tax the rich” stuff Obama spread around in the election included you, did you? Welcome to the barrel.
Get ready!
Sen. Tom Harkin, an Iowa Democrat, said recently that everyone has the right to a retirement with dignity and financial independence… the “right,” mind you. I’m not sure which amendment to the constitution he is referring to.
What’s worse is we are all responsible for this right – the government, businesses and individuals. No one should burden all the responsibility.
I don’t remember anything in the tax laws about my IRA or 401(k) being money used to pay for someone else’s retirement.
There are shades of Lenin in the idea.
Based on this thinking, Mr. Harkin and his like-minded members of the Senate will be pushing to make your IRA and 401(k) fair game to pay for the retirements of those who have not saved enough of their own money to retire with dignity and financial independence.
Right or wrong, this looks like it will happen. So we have to prepare to protect your nest egg from those people who think part of it is actually theirs.
The only viable solution right now is to annuitize the principal in your retirement accounts. It means taking a constant income flow that circumvents the proposed taxes, at least on the distributed portion.
This report is a warning only. There is not enough information available yet to make any firm recommendation on how to avoid or reduce these taxes.
Call your broker this week and make sure he is aware of it and is looking for a solution.
Good luck. We will need it.