What You Need to Know
- As lawmakers consider possible limits on Roth IRAs, planner Jeffrey Levine suggests a $10 million cap on account balances.
- The Roth IRA “is a wealth transfer from taxpayers to subsidize spending in retirement,” Michael Finke says.
- Others object to changing the rules just because a few people reaped huge benefits.
A Twitter debate kicked into high gear after House Ways and Means Committee Chairman Richard Neal, D-Mass., said his committee is mulling legislation to limit “the total amount of money that can be saved in tax-preferred retirement accounts.”
Neal told ThinkAdvisor that such a bill would put “an end to the tax dodging some do when saving in IRAs,” and that “incentives in our tax code that help Americans save for retirement were never intended to enable a tax shelter for the ultra-wealthy.”
The Ways and Means Committee, Neal said, “is working on legislation that will stop IRAs from being exploited.”
Jeff Levine, chief planning officer at Buckingham Wealth Partners, proposed in a tweet a “very simple and fair solution” to Neal’s plan: “Pick a dollar amount. Make it high. Very high. Maybe $10MM to start and adjust it for inflation. Rule: If your Roth > $10MM on 12/31, the excess becomes an RMD next year. $10MM should cover RETIREMENT expenses.”