[Alberta's Child]

Nothing happens overnight. You just can't make any more tax-deferred contributions to your retirement plan if it exceeds $3 million in value. So you take the money ($1,000 or $10,000 or whatever) that you would have contributed to your retirement plan as ordinary (taxable) income, and you do something else with it.

You can still save for retirement, but you just can't deposit it into one of those 401(k) or IRA accounts as a tax-deferred contribution.

[TexasFreeper2009]

I keep reading articles stating something to the effect of... how did Mitt Romney get so much money into his IRA? And I instantly thought to myself... he didn't, he put much smaller amounts into it and it simply grew tremendously after he made the contributions.

Imagine someone who puts $100,000 or so into a retirement plan... and then then use that $100,000 to buy stock is company __________. Then they just happen to get lucky and company __________ stock price goes up 1,000 times overnight. They could end up with 100 million in their IRA even though they only contributed $100,000 into it.

So even if they weren't allowed to contribute anymore money into the IRA .... they would still have 100 million in the IRA that the taxes are being deferred on.