Limits on IRA BALANCES?

[quade 3]

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What do you think?

IRAs were set up to be retirement accounts (says so right in the name), not unlimited tax shelters.

When I get to the point in my life where I've amassed over 3 MILLION dollars in an IRA, I guess I'll worry about what other tax shelters I can find, but honestly I think most of us aren't ever going to have to worry about that.

quade -
The World's Most Boring Skydiver

[quade 3]

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What do you think?

IRAs were set up to be retirement accounts (says so right in the name), not unlimited tax shelters.

When I get to the point in my life where I've amassed over 3 MILLION dollars in an IRA, I guess I'll worry about what other tax shelters I can find, but honestly I think most of us aren't ever going to have to worry about that.

Which is why limits were imposed on contributions.

And only $3 Million bucks Quade? You think too small.

I had made my comments without even needing to read the article. I had heard about this earlier today and thought to myself, "Self, when I'm 65 (or whenever the fuck I can dip into my IRA) how much money will I NEED for retirement?" And when I looked into it and saw the $3 MILLION dollar number I thought, "Holy fuck! That's a shit load of TAX FREE money to sit on and just gather dust."

Now, I'll admit, at some point, assuming you actually do pull it out and use it, you'd have to pay taxes on it. BUT if you've got $3 MILLION squirreled away like that in your IRA, chances are you also have a fuckin' boatload of money tied up in something more profitable like investments.

My entire point is it IS a fucking boatload of money and if it's being tied up in an IRA . . . $3 MILLION is probably enough for that purpose.

quade -
The World's Most Boring Skydiver

[weekender 0]

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What do you think?

IRAs were set up to be retirement accounts (says so right in the name), not unlimited tax shelters.

When I get to the point in my life where I've amassed over 3 MILLION dollars in an IRA, I guess I'll worry about what other tax shelters I can find, but honestly I think most of us aren't ever going to have to worry about that.

Which is why limits were imposed on contributions.

And only $3 Million bucks Quade? You think too small.

I had made my comments without even needing to read the article. I had heard about this earlier today and thought to myself, "Self, when I'm 65 (or whenever the fuck I can dip into my IRA) how much money will I NEED for retirement?" And when I looked into it and saw the $3 MILLION dollar number I thought, "Holy fuck! That's a shit load of TAX FREE money to sit on and just gather dust."

Now, I'll admit, at some point, assuming you actually do pull it out and use it, you'd have to pay taxes on it. BUT if you've got $3 MILLION squirreled away like that in your IRA, chances are you also have a fuckin' boatload of money tied up in something more profitable like investments.

My entire point is it IS a fucking boatload of money and if it's being tied up in an IRA . . . $3 MILLION is probably enough for that purpose.

your opinion is exactly what i see the question and problem is. someone else, the gov't mostly, decides what is too much and what should be taxed. Many can easily exceed the maximum contribution each year but the gov't has picked a number they feel is best and fair and we all must abide by it.

the purpose is not punishment but a need to run a civil society. so the question is, what is fair and at what point does it become a penalty for success. I do think they could raise the limit on contributions, it would create more wealthy old people and it is my opinion, liberals are against that. I do not think 3 million is very much. Not when i see police and school teachers in my area retire with pensions that pay an amount that require that much to be in my IRA. So if a Police officer can receive 70k a year for life from a taxpayer funded pension, i should not be hobbled in what i can save with my own money. keep in mind they already limit that amount i can put in. so this is a tax on what ive earned after already meeting the contribution limit requirement.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[wmw999 2,146]

I'll admit I also don't see 3 million as being that incredibly much. If you saved what you could from the start (which is what all the wonks recommend now anyway), you can get there pretty easily, on a fairly normal salary, at my age. No, I didn't, but then I didn't start saving aggressively until I was in my 40's.

And it's also the minimum you can have saved and be considered OK to self-insure for long-term care in teh case of Alzheimer's or something like that.

Wendy P.

There is nothing more dangerous than breaking a basic safety rule and getting away with it. It removes fear of the consequences and builds false confidence. (tbrown)

[kallend 1,646]

I think you should be allowed to have as much as you want in a retirement account.

I also think that the government has the right to limit how much of it can be tax free.

...

The only sure way to survive a canopy collision is not to have one.

[ryoder 1,397]

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And when I looked into it and saw the $3 MILLION dollar number I thought, "Holy fuck! That's a shit load of TAX FREE money to sit on and just gather dust."

Now, I'll admit, at some point, assuming you actually do pull it out and use it, you'd have to pay taxes on it. BUT if you've got $3 MILLION squirreled away like that in your IRA, chances are you also have a fuckin' boatload of money tied up in something more profitable like investments.

Huh? An IRA *is* money put into investments, such as stocks, bonds, mutual funds etc. Furthermore, an inflation calculator tells me $1.00 30 years ago, is worth $0.43 today, so using that to estimate forward inflation, if you retire at 65 and live to 95, you will:
- Lose over half of your undistributed retirement savings to inflation.
- Draw off enough distributions to live.
- Pay taxes on the distributions you take.

The middle and lower classes need IRA's a lot more than the wealthy class.

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.

[lawrocket 3]

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What do you think?

IRAs were set up to be retirement accounts (says so right in the name), not unlimited tax shelters.

When I get to the point in my life where I've amassed over 3 MILLION dollars in an IRA, I guess I'll worry about what other tax shelters I can find, b

IRA's are taxed when withdrawn, unless it's a Roth IRA, which is taxed when deposited. It's a savings account. And apparently the Cyprus experiment is rather intriguing.

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ut honestly I think most of us aren't ever going to have to worry about that.

This thinking is, of course, the reason why we're so screwed right now. So long as it always happens to someone else, there isn't a big deal.

My wife is hotter than your wife.

[Andy9o8 0]

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So long as it always happens to someone else, there isn't a big deal.

Yep, classic conservative philosophy!

[champu 1]

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I do not think 3 million is very much. Not when i see police and school teachers in my area retire with pensions that pay an amount that require that much to be in my IRA. So if a Police officer can receive 70k a year for life from a taxpayer funded pension, i should not be hobbled in what i can save with my own money. keep in mind they already limit that amount i can put in. so this is a tax on what ive earned after already meeting the contribution limit requirement.

The language in the articles about this are infuriating... "limits on IRAs for the rich", "taking aim at those who stash many millions of dollars in tax-advantaged retirement accounts", "more than enough to retire comfortably", "less than 0.1 percent of IRA and 401(k) savers would be impacted."

I'm 30, and even if I never get another raise and they never raise the contribution limit from the 2013 level, I still fully expect to exceed $3M in my retirement account. I also fully expect to be means-tested out of receiving any social security payments. I am also not rich.

Can the government apply tax benefits as they wish as kallend suggests? Of course. Will fools believe the politicians who implement these total middle-class screw jobs and doll them up as going after the rich? Apparently.

[ryoder 1,397]

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I'm 30, and even if I never get another raise and they never raise the contribution limit from the 2013 level, I still fully expect to exceed $3M in my retirement account.

And the great thing about that $3M cap, is that thanks to inflation over the years, the real value of that cap will get lower and lower, unless the Congress adjusts it for inflation.

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.

[quade 3]

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I'm 30, and even if I never get another raise and they never raise the contribution limit from the 2013 level, I still fully expect to exceed $3M in my retirement account.

And the great thing about that $3M cap, is that thanks to inflation over the years, the real value of that cap will get lower and lower, unless the Congress adjusts it for inflation.

Which is already in the plan.

quade -
The World's Most Boring Skydiver

[quade 3]

You do realize it's not proposing that you can ONLY save $3 MILLION dollars? That it's saying you can only save $3 MILLION dollars in this special tax deferred way.

Right?

Since when did the government have an obligation to give people an UNLIMITED tax deferment?

quade -
The World's Most Boring Skydiver

[rehmwa 2]

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You do realize it's not proposing that you can ONLY save $3 MILLION dollars? That it's saying you can only save $3 MILLION dollars in this special tax deferred way.

Right?

Since when did the government have an obligation to give people an UNLIMITED tax deferment?

they didn't. tax deferment for retirement accounts is another special social manipulation. another 'subsidy' for wall street


Those with libertarians inclinations out there - if you REALLY want to stick with it, you have to give up, 529 college plans for your kids, mortgage interest deductions, tax deferred retirement plans, etc etc etc.

It's easy to identify the tax penalties and subsidies for other people and corps, etc. But to get down to the simplist tax code that's fair and even for everyone (no adjustments, one single low tax rate), ALL the stupid favoritism has to go. Even stuff we like.

How philosophically pure is someone willing to be....?

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[billvon 2,426]

>What do you think?

I think that a $3 million limit on a retirement account is pretty reasonable. If you want to put $30 million into a retirement account, it's not a retirement account, it's an investment vehicle. That doesn't mean it's a bad thing, but it's also not covered under the concept of a retirement account, which is a government incentive to make sure older retired people have enough saved money to cover their needs. (Food would be an example of a need, a million dollar yacht would not be.)

[weekender 0]

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>What do you think?

I think that a $3 million limit on a retirement account is pretty reasonable. If you want to put $30 million into a retirement account, it's not a retirement account, it's an investment vehicle. That doesn't mean it's a bad thing, but it's also not covered under the concept of a retirement account, which is a government incentive to make sure older retired people have enough saved money to cover their needs. (Food would be an example of a need, a million dollar yacht would not be.)

There are limits on what you can put into an IRA already. that is not what the OP was discussing. i do not see how it would be possible to put in that large of an amount given our current limits, anyway. if someone with retail knowledge of IRA's could correct me, please do.

i do not believe 3 million is a reasonable limit. not if public employees can be paid for life, with tax payer funds long after they retire as much as many do. it is not hard for police in my area to make 50-70k for life starting at 40 years old. if that is fair then i should be able to hoard much more of my own money for my own retirement. i should at least be able to retire, with my own money, as well as a 40 year old police officer.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[wmw999 2,146]

I guess the problem is that when you retire or leave work, your 401K is converted to an IRA. A 401K has considerably higher contribution limits than an IRA.

Wendy P.

There is nothing more dangerous than breaking a basic safety rule and getting away with it. It removes fear of the consequences and builds false confidence. (tbrown)

[weekender 0]

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I guess the problem is that when you retire or leave work, your 401K is converted to an IRA. A 401K has considerably higher contribution limits than an IRA.

Wendy P.

yes that is true, ive done that a few times. its a rollover. there are limits on 401k's also, for valid reasons.

my point is that i while i understand limits they also should be reasonable. to me that means i should be able to amass a sum of money that would allow me to retire at the level of a public employee. that would be over 3 million. a number that is not very high IMO.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[CygnusX-1 42]

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i do not believe 3 million is a reasonable limit. not if public employees can be paid for life, with tax payer funds long after they retire as much as many do. it is not hard for police in my area to make 50-70k for life starting at 40 years old. if that is fair ...

It is not fair. Argument over.

But something to consider, $3 million cash is like having a $70k retirement income for 42.8 years! (Provided at retirement age you take your $3M and deposit it into a checking account that pays 0.00% interest.)

[DiverMike 5]

It would be very difficult for Joe Sixpack to come up with a $3MM balance in a 401K. The most you can contribute yearly is 17K (unless you are over 50 then it is $22.5K). The aggregate total you can shelter in a 401K is $50k. The other 33K or 27.5K (depending on your age) must come from an employer match. Unless Joe Sixpack owns the company, it is unlikely the match would be that high.
I have been sheltering every penny I can for the last 20 years. I am well ahead of the game compared to other Baby Boomers, but I am not anywhere near $3MM in sheltered assets (including the 529 plans I have sheltered for my 4 kids).

IMHO $3MM is a more than reasonable limit on sheltered assets.

For the same reason I jump off a perfectly good diving board.

[weekender 0]

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i do not believe 3 million is a reasonable limit. not if public employees can be paid for life, with tax payer funds long after they retire as much as many do. it is not hard for police in my area to make 50-70k for life starting at 40 years old. if that is fair ...

It is not fair. Argument over.

But something to consider, $3 million cash is like having a $70k retirement income for 42.8 years! (Provided at retirement age you take your $3M and deposit it into a checking account that pays 0.00% interest.)

life is not fair, i get it. the OP asked what we thought. that was my opinion.

ok, i considered your suggestion and am going to fire you as my financial adviser. my plan, as is most, will be to live off the interest and save my principle.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[DiverMike 5]

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ok, i considered your suggestion and am going to fire you as my financial adviser. my plan, as is most, will be to live off the interest and save my principle.

Assuming you retire at 67 with $3MM and assuming a low 3% investment return, and assuming you will live to be 92, you would have to live on $180,000 a year.

I am not a financial adviser, but I did sleep at a Holiday Inn and know how to Google 'retirement calculator'

For the same reason I jump off a perfectly good diving board.

[weekender 0]

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ok, i considered your suggestion and am going to fire you as my financial adviser. my plan, as is most, will be to live off the interest and save my principle.

Assuming you retire at 67 with $3MM and assuming a low 3% investment return, and assuming you will live to be 92, you would have to live on $180,000 a year.

I am not a financial adviser, but I did sleep at a Holiday Inn and know how to Google 'retirement calculator'

i get 90k a year. assuming i am living off my interest as i clearly stated in my post. i do not understand your math. you are not a financial adviser, agreed. also, you might want to change hotels and search engines. i say with a smile.

"The point is, I'm weird, but I never felt weird."
John Frusciante

[ryoder 1,397]

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ok, i considered your suggestion and am going to fire you as my financial adviser. my plan, as is most, will be to live off the interest and save my principle.

Assuming you retire at 67 with $3MM and assuming a low 3% investment return, and assuming you will live to be 92, you would have to live on $180,000 a year.

I am not a financial adviser, but I did sleep at a Holiday Inn and know how to Google 'retirement calculator'

i get 90k a year. assuming i am living off my interest as i clearly stated in my post. i do not understand your math. you are not a financial adviser, agreed. also, you might want to change hotels and search engines. i say with a smile.

I think he was assuming you would eat up the principle. That is great if you somehow know exactly how long you will live.

Back when I worked for an insurance company and learned about annuities, I thought they were a fantastic idea, and had planned to go with that option at retirement. But the more I read about them over the years, the more leery I am of them. So like you, I intend to live off dividends, appreciation, and interest, and if possible, try to be conservative enough to allow the principle to grow to offset inflation.

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.

[rehmwa 2]

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I intend to live off dividends, appreciation, and interest, and if possible, try to be conservative enough to allow the principle to grow to offset inflation.

not me, I'm going to spend it all in the first 6 months and then demand the government take care of me

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[weekender 0]

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ok, i considered your suggestion and am going to fire you as my financial adviser. my plan, as is most, will be to live off the interest and save my principle.

Assuming you retire at 67 with $3MM and assuming a low 3% investment return, and assuming you will live to be 92, you would have to live on $180,000 a year.

I am not a financial adviser, but I did sleep at a Holiday Inn and know how to Google 'retirement calculator'

i get 90k a year. assuming i am living off my interest as i clearly stated in my post. i do not understand your math. you are not a financial adviser, agreed. also, you might want to change hotels and search engines. i say with a smile.

I think he was assuming you would eat up the principle. That is great if you somehow know exactly how long you will live.

Back when I worked for an insurance company and learned about annuities, I thought they were a fantastic idea, and had planned to go with that option at retirement. But the more I read about them over the years, the more leery I am of them. So like you, I intend to live off dividends, appreciation, and interest, and if possible, try to be conservative enough to allow the principle to grow to offset inflation.

i think he is using the google calculator wrong.

i think the first gentleman was assuming i would draw down my principle. he was wrong and that goes against most financial planning.

if i have 3mill and get 3% a year, that is 90k a year in income.

"The point is, I'm weird, but I never felt weird."
John Frusciante