Comments on: Help! I Don’t Know What Retirement Plan You’re Talking About!

By: AnnJo

AnnJo — Tue, 25 Oct 2011 19:27:11 +0000

deRuiter,

Since money in 401(k)s and IRAs is already subject to taxation when it is withdrawn, the more likely route to confiscation would be indirect, such as a requirement that a certain % of the account be invested in government bonds – for the sake of “safety” and to protect you against market volatility, of course. (Poland was considering this route last year; I don’t know if they did it or not.)

Another manipulation might be prohibiting investments in non-US companies, bonds or currencies. Argentina did something like this, along with nationalizing several private pension funds, in 2008.

Financial investment transaction excise taxes or fees are another avenue. This latter proposal on a global level has had the UN salivating for a number of years now.

Hungary last year gave people a choice: transfer their private pension funds to the State or lose 70% of their state pensions (equivalent to Social Security here), even though they would still be required to contribute to the state system.

Unfortunately, Roth accounts are just as much at risk for such manipulations as any others.

As long as government spending is set on autopilot to the “out of control” dial setting, it is naive to think there is any safe harbor from government taxation powers.

By: deRuiter

deRuiter — Mon, 24 Oct 2011 15:19:51 +0000

I hadn’t thought of the retroactive taxing angle #7 Kristine, you’ve reinforced my satisfaction with my choice of a ROTH with a reason about which I never thought. Thanks! I’ve been uneasy about all the politicians speaking about the tremendous stash of money belonging to those with traditional (pre tax) retirement accounts. That bunch will stop at nothing to continue the spending free which enriches them and their relatives and cronies, and is the basis for their power. So many of the members of Congress and Senate are voted in and they have NOTHING. Yet when they retire with government pension and gold plated health care (no Obama care for them, they are exempt) they are multi millionaires.

By: kristine

kristine — Mon, 24 Oct 2011 12:07:41 +0000

de rutier- interesting. Though I am not like-minded poitically- I do see how a Roth would be safer from gov interference, as the taxers have already been taken out. They can up the taxes on a 401, but it would be harder to retroactively collect taxes from a previously taxed Roth.

By: Tom

Tom — Mon, 24 Oct 2011 11:23:21 +0000

#4 Arvin
You may have both, but the $5000 limit applies to total contributions. So you can’t put $5000 in a traditional IRA and $5000 in a Roth IRA.

By: deRuiter

deRuiter — Mon, 24 Oct 2011 09:28:45 +0000

Our rapacious politicians are looking for new sources of money. They are hungrily eyeing all that money piled up in tax deferred retirement accounts. There is a thought in Congress and the White House that perhaps this money could be taken over by the government to “manage”, (Social Security trust fund anyone?) and a suitable income given to you when you finally retire. The government spends money better than you and I do, like the million dollsrs recently spent in Kenya to teach Kenyan men to wash their penises (I kid you not!) after having sex, surely a better use for a million American taxpayer dollars than whatever those taxpayers would have spent the money on if they were allowed to keep it. I put my money in a post tax ROTH IRA as it is a little harder for our rapacious politicians to justify confiscating money on which the taxes have already been paid. Obama’s buddy got 585 million for Solandra which was known to be failing, other “green” projects like the car company in Finland (also an Obama fund raiser bundler involved there) got a similar sum to keep green jobs in Finland. If you can do a ROTH I suggest it as a slightly better chance at preserving your capital.

By: arvin

arvin — Mon, 24 Oct 2011 03:01:56 +0000

This is something I’d always wondered about. So is it okay to have both an IRA and a Roth IRA? And do the contribution limits apply to both, or individually? As in the approx. $5000 limit, can I contribute 5000 to each of my IRA and Roth IRA, or will it need to be 5000 combined between the two?

By: kristine

kristine — Sun, 23 Oct 2011 16:41:30 +0000

Well… the other element you cannot control is economic stability. Retirement funds are only as safe as the eco-political system in which they are housed. Just ask any Argentinian.

By: krantcents

krantcents — Sun, 23 Oct 2011 16:17:14 +0000

My wife and I max out 403B, IRA and Roth IRA. Having sufficient retirement savings is important. The one element I can not control is how long I will live. This the main reason I keep adding to our savings. I expect to live 30+ years in retirement.

By: Mary

Mary — Sun, 23 Oct 2011 14:36:32 +0000

Great article. This helps a lot, coming from a 25 year old who hasn’t even begun her retirement savings yet thanks to the economy. Next May I should have a stable job and will have the opportunity to start saving for retirement. I had no idea there were so many different options for this. So thank you!