Via LearnVest By Alden Wicker ~
We’re always telling you to save, save, save for retirement! So you bet we would be alarmed if Obama proposed to tax all retirement accounts.
That’s the rumor, anyway. But don’t have a panic attack, because you likely won’t be affected.
In Obama’s newest budget proposal, he proposes capping individual retirement accounts at $3 million. Given that over half of American workers haven’t saved enough for retirement, and the average retirement account of Americans 55-64 is only $120,000, only a few Americans will be affected.
But still, if you want to save enough to buy a yacht when you retire and park it in Monaco, isn’t that your prerogative? Actually it still is, but if Obama gets his way, you just have to save that money in a regular savings or investment account, where its growth will be taxed. The upside is that this move could actually benefit you (the average American), in a way.
You see, as Forbes points out, when wealthy Americans park their retirement savings in a tax-deferred savings account, that money isn’t being circulated and multiplied through the economy, nor is it generating tax revenue that could help balance the government’s budget. It’s a sort of tax loophole disguised as sound financial planning. (Romney used it to squirrel away $100 million.)
Only time will tell how amenable Congress will be to this proposal. So no, you don’t have an excuse to cash out your 401(k) and move to Tahiti. Nice try, though.