This is why I tell people they shouldn’t pay the taxes on an IRA and convert it to a Roth to any large degree.
Ten years from now some people are going to be sitting on huge (converted) Roth IRAs that are supposed to be exempt from all income taxes when withdrawn. All it will take is for a Democrat arguing “fairness” and pointing to someone withdrawing, say $50k from a Roth IRA of $1,000,000 to get a groundswell going to tax them in spite of what the previous law specified. Then they’ll end up paying the taxes twice.
Hell, it wouldn’t surprise me to see even our after-tax savings partially confiscated in the next financial panic. Greece has already done it, so the precedent is there.
One of Obama’s sorriest accomplishments is convincing a lot of people that contracts mean little anymore, especially when the government comes calling. And if he ever gets to appoint a liberal Supreme Court, they’ll mean nothing at all any longer.
Norseman, I doubt they will change the rules on a Roth. Too politically risky. Besides, if they announce their intent to change the tax treatment of Roth funds, people will immediately draw them out while they are still tax-free, before the law can be changed and enacted. What will screw the folks who have big Roth balances is the enactment of a VAT. I’m a big Roth fan, but the thought of a “VAT in lieu of (or in addition to) income tax” scheme being passed in the future is what freaks me out. With a VAT, even withdrawing your Roth funds before they can change the Roth rules will not help, because the VAT will be the double taxation.