“Pure horrors. This could apply to everybody with unrealized capital gains and devastate the vast majority of investment accounts. Middle class, say goodbye to your hard earned retirement accounts, which are mostly made of appreciated assets.”
Your wrong about this. The distribution from my IRA is taxed as regular income, not capital gains.
You’re missing the point. The reported tax is on unrealized capital gains, which also exist in IRAs and 401(k)s. Also lots of people fund their retirements through ordinary investment accounts that, when well managed, accumulate large amounts of unrealized capital gains.
They want to tax the 401k accounts as capital gains when assets appreciate, then as income when disbursed.
Capital Gains on Roth IRA monies are not currently taxed.
You really need to learn how to read your year end, or quarterly for that matter, IRA statements. They will show you unrealized gain for "the period" and "for the life of your account". For example, if you look at your year end statement, you will see the account value at the beginning of the period and the value at the end of the period. Let's say it was $500,000 on Jan 1 and is now $580,000. It will also tell you that that is $80,000 unrealized gain for the year. That $80k is what they want to tax, in addition to your regular withdrawal.
How do you think you built up your IRA without gain being a large part of it? Gains are what cushion you from depleting the account quickly.