Federal Government Looking for Ways to Get to Retirement Funds

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Just when you thought your retirement account was safe from the federal government, think again. That’s’ because according to the Government Accountability Office, there are around 9,000 U.S. taxpayers who have a minimum of $5 million in an individual retirement account.

Now some lawmakers are taking a closer look at these accounts because as Senate Finance Committee Chairman Ron Wyden of Oregon puts it: “The IRA was never intended to be a tax shelter for millionaires.” According to the GAO report, these accounts are only possible for someone who has access to investments that are not available to most people or who has an aggressive investment strategy.

Meantime, there were an estimated 1,100 taxpayers that had more than $10 million in their IRAs as of 2001, according to the GAO report. Of those, 314 people had more than $25 million. On the other hand, that means that close to 99 percent of all people who have IRAs have less than $1 million in their accounts.

So what, if anything, is the government trying to do about these types of accounts? For starters, last year, President Obama introduced a proposal that would put limits on these kinds of accounts. Under his proposal no one would be able to add tax-favored contributions after their total account balances accumulated about 3.2 million. However, so far, the president’s proposal has not moved forward in Congress. It remains to be seen if other lawmakers will push harder for changes.

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