Posted on 02/02/2015 10:45:29 AM PST by abb
With the release of its 2016 spending blueprint Monday, the Obama White House officially signaled its intent to use retirement policy to raise taxes on the wealthiest Americans.
The proposed 10-year budget, which allots $4 trillion in spending for fiscal year 2016, will attempt to cap tax-deferred saving in 401(k) and Individual Retirement Accounts at about $3.4 million.
That amount of savings generates more than $200,000 of income annually in retirement when annuitized, an income stream that should be sufficient for most, according to the Obama administration’s rationale behind the proposal.
The vast majority of Americans would never feel the cap. In 2011, only one out of every 1,000 Americans had more than $3 million in their retirement accounts, according to the Employee Benefit Research Institute. That said, many in the industry oppose it, especially in light of concerns over rising interest rates.
“Politically, it is convenient to target people who have saved $3.4 million,” Klein said. “But the devil is in the details when you look at the impact on younger workers and the inevitability that interest rates will rise over the coming decades.”
The problem is that annuity prices vary with interest rates because insurance companies buy bonds to finance pay-outs. When bond yields are low, as they are now, annuities are more expensive. Right now a 10-year Treasury bond yield is just 2 percent. If it jumps to 5 percent (the rate in 2006), that $205,000 annual annuity would only cost $2.2 million. .
The cap is a relatively small gambit in the budget’s larger effort to raise revenues by increasing capital gains taxes, inheritance taxes, and taxes on foreign revenue streams of U.S. multinational companies. Related 13 things on the IRI’s regulatory agenda
A possibly overreaching fiduciary standard is just one of many items the organization will lobby on in the coming year.
The budget also purports to stimulate middle-class incomes with a series of spending initiatives and tax cuts.
New retirement regulations in the budget would also make it easier for workers to save for retirement through their employers by giving 30 million more workers access to IRAs in which they are automatically enrolled, according to a fact sheet published on the White House’s Office of Management and Budget site.
Not really the governments job to decide what is a sufficient income, is it??
Do you think George Soros and the other leftist billionaires would live on that?
Fire up the shredder...
FUBO! Who died and made you king?
His next tax will be means testing Social Security income so if you were a good doo-bee and saved your ass off, he will tax your ass off.
Except of course ex-Presidents, Senators and Congressmen.
Social Security is already “means tested.”
http://www.ssa.gov/planners/taxes.htm
Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.
No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules.
If you: file a federal tax return as an “individual” and your combined income* is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.
file a joint return, and you and your spouse have a combined income* that is between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
more than $44,000, up to 85 percent of your benefits may be taxable.
are married and file a separate tax return, you probably will pay taxes on your benefits.
when junior agrees to live on about 55k in retirement, then I will listen.
“The vast majority of Americans would never feel the cap.”
Never feel the cap THIS time. In a few years the cap will be ratcheted down to 1mil, than 750K to 250K. There has never been a pot of your money that the government hasn’t tried to grab.
It’s far easier to go after the middle class than the super wealthy who have every way to keep their money so yours can go to the deserving poor. /s
He is throwing all sorts of crap out there just to see what will stick.
True that, but it makes for good campaign slogans.
Obama: “I do think at a certain point you’ve made enough money”
I won't be anywhere near the three million cap, but I'm doing reasonably well. Enough so that by using the scenarios you provided, I'll likely get very little from my SS income (should it still be there when I retire.)
This dude must have lost his damn mind.
He knows none of this stuff has a chance of getting through. It’s just red meat for the Marxist class envying base.
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2015/assets/opportunity.pdf
• $28 billion in savings from reducing tax benefits for multi-million dollar retirement accounts. Tax-preferred savings accounts were intended to help middle class families save for retirement. However, under current rules, some wealthy individuals are able to accumulate millions of dollars in these accounts, substantially more than is needed to ensure a secure retirement. The Congress could pay for the remaining half of the Opportunity, Growth, and Security Initiative by enacting the President’s proposal to prevent additional tax-preferred saving by individuals who have already accumulated tax-preferred retirement savings sufficient to finance an annual income of over $200,000 per year in retirement — more than $3 million per person.
LOL- the moron tried to do this a few years ago at $3mill:
http://www.moneynews.com/StreetTalk/Retirement-Obama-3-million-IRA/2013/04/18/id/500082/
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