Last week, House Democrats decided that investors, Millennial savers, entrepreneurs, and retirees were going to get a special Thanksgiving turkey this year: a special tax and raid on your IRA to pay for their massive social spending plan.
The result: Americans’ retirement savings will now be in jeopardy and a higher tax bill – giving millions of Americans two fewer things to be thankful for this year – unless the Senate puts an end to this nonsense.
Breaking Precedent & Promises
If these IRA changes make it through the Senate, the Biden-Democrat Plan will break decades of bipartisanship agreements on retirement policy in order to:
- Ban after-tax contributions being converted to a Roth IRA
- Force aggressive rollovers of IRA to Roth IRA before the end of the year – creating a higher tax bill
- Ban 401K employer Back Door Roth conversions
- Raise Taxes
- Empower the IRS to audit your IRA account
- Change the rules midstream for millions of retirement savers
If passed, the Biden-Democrat Tax and Raid IRA Plan would ban many after-tax contributions from being converted to a Roth IRA for investors making under $400,000 per year – making this a potential violation of President Biden’s tax pledge.
Well-Known Investing Columnist Weighs In
Wall Street & Main Street are waking up the Biden-Democrat plan to raid IRAs.
This week, James Glassman wrote in Fox Business that IRAs have always been a bipartisan program to successfully “encourage savings, which in turn provide capital for businesses to start and grow, adding to employment and prosperity.”
However, “in a short-sighted and dangerous attempt to find revenues to help finance a multi-trillion dollar social welfare and climate mitigation package, some Democrats want to dismantle IRAs as we know them.”
While Biden and Democrats claim their IRA changes would only go after the super-rich, “it’s the entire program that is subject to attack” according to Glassman.
Democrats’ message to Americans with these changes is clear: “stop saving!”
One of the benefits of encouraging more Americans to save for retirement is that it creates a more financially independent retiree population – reducing the burden on the federal government and social programs like Social Security and Medicare.
By discouraging retirement saving for millions, Democrats are forcing retirees to be more reliant on Uncle Sam.
This appears to be exactly the Democrat Plan: a more compliant and reliant society.
Biden’s ‘Don’t Cry For Me Argentina’ Moment
Glassman concludes with a warning to retirement savers: “if policy makers are willing to disrupt a bipartisan program that has been providing secure savings and trillions in investment capital for a half-century, it’s not hard to imagine worse things in store.”
Back in 2008, a cash-strapped Argentine government nationalized their citizens’ pensions – similar to to IRAs in the United States – in an effort to use “the proceeds as a political piggy bank by the country’s president.”
It appears that Biden and his fellow Democrats are longing for America to be the next Argentina.
Attack on 401Ks Begins
If the Tax and Raid of your IRA wasn’t already enough, Democrats are now targeting employer-based 401K retirement vehicles.
According to a recent Forbes article, “new rules would apply broadly to workplace retirement accounts like 401(k)s and 403(b)s as well as Individual Retirement Accounts (IRAs) and deferred compensation plans” by banning Mega Back Door Roth conversions.
Instead of encouraging employees to contribute to their employers 401K and for employees to maximize their annual investment for their retirement, Democrats are sending a clear message: stop investing in employer 401Ks so we can tax more of your earnings to pay for our wealth redistribution plan.
Just like in the iconic 1947 film, Miracle on 34th Street, American investors, middle class families, Millennials, entrepreneurs, and retirees with a 401K and/or Roth IRA will need a Christmas miracle in order to protect their hard-earned retirement savings from being taxed and raided by Biden and Democrats.
While we hope Senator Kyrsten Sinema’s (D-Ariz.) opposition to these IRA changes will spread to more of her colleagues in the Senate, millions of retirement savers will be waiting anxiously in the meantime.