Roth IRA’s were created in 1997 to invest after tax dollars with the proceeds at retirement remaining untaxed. We pay the tax now so that we don’t have to pay it later. If the new administration gets its way, those proceeds would be taxed.
In yet another revelation, which isn’t being discussed in the popular media, the reason behind having a Roth IRA would be negated. The House Ways and Means Committee budget proposal would require withdrawals on Roth’s at age 72, and those withdrawals would include a hefty tax bill.
It’s one thing to raise taxes, but yet another to do it retroactively.
That’s right. This would be done retroactively. Americans have faithfully deposited after tax dollars into their Roth’s with the expectation that the withdrawals would be completely tax free. Afterall, that’s the current law.
Under this new tax proposal, all of that money whether existing or new, would be taxed. Tax hikes should by definition, apply only to the future, not the past.
This tax change would be punitive in nature, punishing Americans for doing what we’re supposed to do; save for our retirement. We knew that they were going to raise our taxes, but this is ridiculous.
Let’s also remember that their mantra on this tax hike is that it’s only supposed to affect the wealthy. Roth IRA Contributions phase out once a single taxpayer hits $140K and a MFJ reaches $208K in MAGI.
Given those contribution limits, this would be nothing more than another tax increase on the middle class.
Let me leave you with this.
We always get a surge of new business at the beginning of the year. I signed 21 contracts last January alone.
I’m not complaining. It’s always wonderful to welcome a new client, but it would be much easier to welcome that client when we aren’t in the middle of tax season.
If you are at all thinking about changing firms, can we do it now please? Even if you aren’t thinking about that switch until January of 2022, it would be helpful to begin the process now.
It takes time for us to get a new account up and rolling. Especially if we’re talking about payroll, where I need to request permissions from the Fed and the State to file electronically.
Another reason is that now is the time to do tax planning. Once we get into January, there isn’t much that can be done to save tax dollars.
Please contact us today.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. If you need Employee Retention Credits, PPP Loan Forgiveness, Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
773-267-7500
www.AccountingSolutionsLtd.com
Note that the only professional services provided by Accounting Solutions Ltd. are those specified in a written communication from our office detailing the scope of services to be rendered and the terms and conditions applicable to the engagement.