[pgyanke]

I’ve seen the Roth IRA proposals before and I’m dumbfounded at how this helps the government raise money. First, if you eliminate the ability to convert Traditional IRAs to Roth, you will have to wait until participants withdraw in the future to see the taxes. The government will be shooting itself in the short-term funding foot. Second, if you apply RMDs to Roth IRAs... so what? You now have to start taking money from your Roth IRA? Ok... and that benefits the government how? The withdrawals are tax-free.

Now, if they were to say that withdrawals from a Roth IRA would be taxable, then you might have something. Until then, I don’t get these proposals from a government, tax-generation standpoint.

[Beagle8U]

“Now, if they were to say that withdrawals from a Roth IRA would be taxable, then you might have something. Until then, I don’t get these proposals from a government, tax-generation standpoint.”

Currently a Roth IRA is after tax money you invest. When you withdraw it after age 59 1/2+ both what you put in AND any earnings on the investment are tax free.

O’bastard wants to tax the earnings part, which may amount to as much as 50% of it.

[NewMexLurker]

I don’t get these proposals from a government, tax-generation standpoint

I've been scratching my head over that part about requiring RMDs on Roth IRAs as well (they already require RMDs on the other flavor of Roth - the 401k Roth). Maybe the government knows that whatever you have in your Roth IRA today is a lost cause to them, but they could be looking down the road. If they can force you to move money out of your Roth IRA before you want to, then any future earnings on that money probably will be taxable. Either you put in back in some kind of taxable investment (since you are unlikely to be able to contribute any more to a Roth IRA, once you hit the age that RMDs kick in). Or if you spend that money, then someone else will do something with it, and eventually pay taxes on it. Either way, by requiring those RMDs, the government is forcing you to put that money "back in play" for taxes on future earnings.

[EVO X]

I’ve seen the Roth IRA proposals before and I’m dumbfounded at how this helps the government raise money.

Employer Roth plans require RMD at 70 1/2. I am guessing they want that rule to apply to Roth IRA's because people have the option of rolling over their employer plan into the Roth IRA when they retire or move on..

[Jim Noble]

“dumbfounded at how this helps the government raise money.”

He doesn’t care if it raises a nickel. That’s not why he’s doing it.