The Government is NOT Planning to Confiscate your IRA

Whenever there is a new administration there is a lot of uncertainty about what the change will mean for retirement accounts. In 2021, this change is happening in the middle of a pandemic that has upended the lives of most Americans and created enormous economic and psychological stress. The result has been more speculation about the future of retirement accounts than usual.

Accountants like to say that the tax code is written in pencil. This is certainly true of the rules for retirement accounts. In recent years, we have seen the SECURE Act come and completely upend the rules for inherited IRAs. We have also seen more favorable rule changes over the years, such as the introduction of qualified charitable distributions (QCDs), new exceptions to the 10% early distribution penalty, and expanded eligibility for IRA and 401(k) contributions as well as for Roth conversions. The rules have changed in the past and can change in the future. Tax rates too have gone up and down in the past and will no doubt do so in the future.

Retirement account owners should always expect the possibility of change and stay up to date on potential new legislation or guidance. What those saving for retirement should not do, however, is panic. That is when retirement savings can be put in jeopardy. The advice of a knowledgeable financial advisor who is current on the latest developments can be very helpful in sorting through what is real and what is baseless speculation.

An example of baseless speculation that has come up in the past and has recently resurfaced is the claim that the government is planning to confiscate all IRAs and 401(k) plans. This is simply not true. There is no evidence that this has ever been proposed nor is it currently proposed. This type of rumor can be dangerous. An IRA owner who believes this completely unfounded claim may take drastic actions such as withdrawing funds or making risky investment choices that could leave her with large tax bills and no retirement savings.

These are challenging times. The best thing retirement savers can do is stay informed on any potential future rule changes. Plan proactively but stay calm. Stay up to date and get good advice. Don’t let false information lead you into making panicked decisions that could adversely affect your secure retirement.

I am an Ed Slott Master Elite trained IRA Specialist and I would like to help you. If you have any questions regarding this article or would like to schedule a complimentary consultation please call my office at 845-627-8300. My Client Service Coordinator will be happy to set up a convenient time so I can help. 

Follow Beth Blecker on Twitter: @EasternPlanning

_{“Ed Slott’s Elite IRA Advisor Group” is solely an indication that the financial advisor has attended training provided by Ed Slott and Company. Ed Slott is not affiliated with Royal Alliance Associates, Inc. Securities and advisory services offered through Royal Alliance Associates, Inc. Member FINRA/SIPC. Securities and advisory services offered through Royal Alliance Associates, Inc. (RAA), member FINRA/SIPC. RAA is separately owned and other entities and/or marketing names, products or services referenced here are independent of RAA. Copyright © 2021, Ed Slott and Company. Reprinted with permission Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information.}