Will Congress Take Away Your IRA?http://www.fool.com/retirement/iras/2012/02/15/will-congress-take-away-your-ira.aspx Dan Caplinger
February 15, 2012
For decades, tax-favored retirement accounts have given savers their best chance to gather up a big enough nest egg to have a prosperous, financially secure retirement. But as the federal government looks for ways to increase tax revenue, some have feared that the tax breaks that IRAs and 401(k) plans enjoy might be on the endangered list -- and a recent move in Congress brought those fears to the forefront.
On the chopping block?
But as the recently proposed federal budget shows, the government is hungry for tax revenue, and one potential source comes from retirement accounts. Although some fears are overblown, others are much more likely to become reality -- and you may want to start planning for them sooner rather than later.
The deal of the century
When you combine this with extremely generous laws that allow people inheriting IRAs to stretch out withdrawals over their entire lifetimes, you have the potential for a multigenerational tax windfall that arguably goes well beyond what anyone would have intended for a retirement account.
It's entirely possible that these inheritance laws could be changed to reflect the primary purpose of IRAs and 401(k)s as covering retirement expenses. Forcing accelerated withdrawals would pump more tax revenue into the federal system more quickly, producing the budget savings that Congress is searching for.
That would be good for Uncle Sam but bad for a range of businesses. Some of them would include: