How President Obama is messing with your IRA

Over the past several years I have been turned off by the overheated rhetoric between the Democrats and the Republicans.   I figured a more thoughtful approach would be to sit on the sidelines above the fray.

Over the past few decades I have decided that the ROTH IRA would be one of the pillars of our retirement planning.   It is perfect for us.

Before becoming president, Mr. Obama was a law professor.  In order to become a law professor, he was required as part of his law school training in contracts and other courses to spend many hours thinking about reliance and how important it is as a principal of a civilized society.  Despite this background, as leader of the Democrat Party he has, in his 2015 budget, proposed to eliminate at least two key provisions of the ROTH IRA law that will severely alter the tax advantages enjoyed by that investment. (see Adrea Coombes article in the Wall Street Journal http://online.wsj.com/articles/should-i-leave-a-roth-to-my-heirs-1410120116 )

The simple explanation of the current ROTH IRA is that it is a fund that can grow tax-free over your lifetime, your spouse's lifetime and your children's lifetime.  President Obama has proposed that Roth owners will be required to start taking distributions at age 70 years and 6 months, and that children will be required to disburse within 5 years of the the owner's death.  For most of us, that knocks off at least 50% of the advantages of the ROTH. 

To say that I am upset about this proposed change is an understatement.   Anything that can be done to defeat this proposal will be a great benefit to those of us who invested in the original ROTH IRA proposal.  Sitting on the sidelines is no longer an option for those who want to preserve this great investment.

Posted on September 14, 2014 .