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Fools:

I have substantial IRA that I am considering converting in whole or in part. My situation is complicated and I am seeking a person/firm that specializing in this area and is highly regarded.

However, several months ago in a Barron's issue, one of the several members of the Roundtable Series commented that he could think of at least nine ways our government could recapture this tax free income without repealing the statute. In general, I no longer trust government when it comes to taxes....look at the evolution of tax treatment of Social Security. This may be a ruse to collect a enormous amount of tax money in 2010-2012 and then "recapture" in subsequent years

Besides helping with a reference, would any fools wish to comment on this situation?

Noneyet
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I have substantial IRA that I am considering converting in whole or in part. My situation is complicated and I am seeking a person/firm that specializing in this area and is highly regarded.

However, several months ago in a Barron's issue, one of the several members of the Roundtable Series commented that he could think of at least nine ways our government could recapture this tax free income without repealing the statute. In general, I no longer trust government when it comes to taxes....look at the evolution of tax treatment of Social Security. This may be a ruse to collect a enormous amount of tax money in 2010-2012 and then "recapture" in subsequent years

Besides helping with a reference, would any fools wish to comment on this situation?


Nothing is ever permanent and immutable when it comes to tax law. There's no doubt that the relaxation in the conversion rules is designed to generate more tax revenue in the near future. The same thinking wsa behind the 1998 conversion rules when Roth IRAs were created.

While no one can predict what Congress will do in the future, the easiest way to recapture some of the tax revenue lost within Roth IRAs is to pass a law stating that as of [date] all Roth IRAs are changed (I don't want to use "convert" or "recharacterize" so as not to confuse with current terms of art) to non-deductible traditional IRAs with basis equal to their value on [date]. This would maintain the tax-free status of previous gains within the Roth IRA but subject any future gains to income tax when distributed.

Ira
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Can't quite think of all 9 ways, other than outright taxation of qualified Roth withdrawals for, say, high income individuals. Another way that might effect some is to make the earnings portion of future qualified Roth withdrawals countable towards the provisional income calculation used to determine how much of one's Social Security benefit is includable as ordinary income.

But this is politically treacherous territory, as the only ones affected by this sort of 'retro-tax' are going to be those who have saved or converted to their Roth's with the idea of tax-free future withdrawals, which means over 59.5....and this group tends to collectively vote in-mass.

BruceM
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But this is politically treacherous territory, as the only ones affected by this sort of 'retro-tax' are going to be those who have saved or converted to their Roth's with the idea of tax-free future withdrawals, which means over 59.5....and this group tends to collectively vote in-mass.

BruceM
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Yes, but this is the same group that collectively got burned by the taxability of Social Security benefits.

When I started working, SS benefits were, and always had been, tax-free.
Today, they are anywhere from 0-85% taxable, depending on other income.
And you don't have to be "rich" to be at 85%.

Same voting demographics were at play.

Bill
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Currently there are still other advantages to a ROTH:
1.) No Minimum Required Distributions
2.) If estate taxes are expected, then converting the IRA "prepays" the income tax. This avoids paying estate taxs on the income tax.

Tax laws will change and congress will be drooling over a large amount of tax free income. It is impossible to predict how they will try to tax it.
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When I started working, SS benefits were, and always had been, tax-free.
Today, they are anywhere from 0-85% taxable, depending on other income.
And you don't have to be "rich" to be at 85%.

Same voting demographics were at play.



dunno...... same age-group, but i think people had a different attitude towards taxes back then -- sort of "the price you pay for civilization"

no Tea Party howling against any tax at all


=
..... not "super-rich", but pretty close to "rich" -- i live pretty fat, and have yet to pay any taxes on my SS (iirc)
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noneyet: "Besides helping with a reference, would any fools wish to comment on this situation?"

I did not read the article, cannot name 9, and have been geeked on several, but another way is a national sales tax - e.g., FairTax.

You can google FairTax and see that it would like a federal sales equal to nearly 30% of the sales price before tax.

Regards, JAFO
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