- quote -

Unfortunately, it was shattered, and then the cat ate it ! ! ! !
(I really don't have a cat, I made that part up)
Cal

Thanks to All! Interesting comments by Cal and Ed regarding
grandfathering existing investments/plans. Your comment, Ed, about
congress ignorantly and unintentionally clobbering good things makes
good sense too.

Most of what you said is what I believed in the back of my head, I
just needed confirmation.

Cal- I feel really horrible about your crystal ball. I hope that no
one was hurt and that you can replace it quickly.

"Jeff McAhren" <mcahren[at]hotmail.com> wrote in message
news:e9960615.0407281012.378ff79f[at]posting.google.com...
- quote -

YES

- quote -

I was about to answer this question, when I heard a
loud "crack". Lo & behold, I found that my crystal ball
had shattered. Therefore any answer that I might offer
would simply be a guess as to what Uncle Sugar might do.

Having said that, I can offer that "in the past" when
the
INFERNAL REVNOO SOIVES decides to make a
change, they generally "grandfather" in the existuing
plans.........
Cal Lester CLU

- quote -

Jeff McAhren wrote:

- quote -

Well, the *IRS* can't do it on a whim, since they only impose taxes
that are passed into the law by Congress.

Now Congress clearly *could* directly tax Roth distributions, though
it seems incredibly unlikely. That is, they could impose a
confiscatory tax on regular IRA distributions or capital gains as
well, but political realities are such that it seems unlikely they'd
do so (at least if they plan to be re-elected <grin> ). Congress
does not like to appear to be directly violating an "implied
contract" on an issue like this.

More likely is that Congress would change the law to remove the Roth
option prospectively--that is, those who already had Roth accounts
would get the treatment for distributions, though no additional
contributions likely could be made and no new accounts could be opened.

A more troublesome issue would be if Congress were to *indirectly*
end up trashing Roth accounts. For example, the income tax is
totally repealed and a large consumption tax is put in its place to
make up the shortfall. In that case, retirees who withdraw from a
Roth will end up in the same position as those that withdraw from a
traditional IRA--but without having had any prior tax benefit.

The odds of exactly that happening? Probably not good, as the best
numbers I've ever seen on an *extremely* broad consumption tax ends
up with a rate in the 20+% range--and that's without including any
exemptions for certain items (and consumption taxes are notorious
for exemptions).

But there are likely many ways Congress could indirectly clobber the
account, because it's very likely that most Congress-critters
wouldn't understand the impact and so would cause the damage out of
ignorance. Of course, the same is true of virtually any other
alternative <grin> .

--
Ed Zollars, CPA
Phoenix, Arizona

Jeff McAhren <mcahren[at]hotmail.com> wrote:

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There isn't any guarantee what tax rates will be 10 or 20 years from
now. Originally Social Security payments weren't taxed, but they are
now. Tax rates on a regular IRA may be reduced which may change which
IRA is a better deal for you.

--
Ron

Please bear with me, I'm not good at this stuff.

If I understand correctly, when I retire in 20-something years, my
Roth distributions are tax free. So if my Roth account was worth
(hypothetical) $5000 when I retire, then I can withdrawal and spend
the $5000 cash, and not pay any taxes or fees (assume that I followed
contribution and distribution rules, I have no redemption fees, ignore
low balance fees).

Assuming that the above statement is correct, my question is this: Is
there any chance that 10 or 20 years from now, the government/irs can
decide on a whim that they should begin to charge some kind of taxes
or other fees against the balance or the distributions from my Roth
account? Are there any other risks regarding my assumption that the
entire $5000 balance is mine (besides normal market risk)?

Same question: Coverdell account...?

Thanks!

mcahren[at]hotmail.com (Jeff McAhren) writes:

- quote -

Yes -- that is the current state of the law.

- quote -

Yes. Congress is quite legally free to do any/all of what you say.

- quote -

Same answer.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us