Up until 1997 IRA's had a "success tax" of a 15% surcharge on annual distributions exceeding $160,000/year. The reasoning was that IRAs were designed to be retirement plans, not wealth transfer vehicles for the wealthy.http://money.cnn.com/magazines/fortune/fortune_archive/1997/...On the other hand, more red flags of danger should wave if Congress and President Clinton don't agree to repeal the so-called success tax this year. The 15% levy now applies to "excess" distributions from 401(k)s and IRAs (more than $160,000 a year). That extra wallop at the end alters all sorts of calculations, since it discourages accumulating wealth. But now, thanks to Sen. Phil Gramm (R-Texas), Congress is poised to repeal the tax. The Senate has passed Gramm's repeal provision, and insiders believe it has a strong chance of surviving the whole process. If the President signs a tax bill this year, the "success tax" likely will no longer be a peril for aggressive savers. </snip>intercst
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