Roth IRA surprise!

[dhibbits]

I was visiting with an employee of the IRS the other day and mentioned something about the Roth IRA to him. He told me that he would not be surprised if, at some point way in the future, congress decided to "change their minds" on the tax free status of Roth IRA earnings being withdrawn. My clients have voiced similar thoughts.

What do the members of this forum think? And is there anything that could keep congress from changing their minds and taxing the earnings at some point in the future?

[110300.3003]

Just one comment: most IRS employees are in the audit/collection area (I presume your contact was). Only a very few are in the policy planning area (mostly in the DC and Baltimore area). The thinking and culture is vastly different. The planners, IMO, are really focusing on what makes sense for the U.S. over the long haul. My personal opinion is that most IRS people "insiders" seem to be out of the loop, and are not even particulary up to date with internal publications, with regard to policy planning. If you think about it, the personality type and training are totally different than a planner's.

[twenhafel]

As a former staffer to a U.S. senator and as a former policy planner analyst for the federal government, I agree with Tony's assessment of public employee mindsets. I have federal employees of all types: political appointees, policy wonks, and your basic administrative types.

My own thinking is that trying to make Roth's taxable in the future is similar to eliminating the mortgage interest deduction or means-testing Social Security. Too many people will have a vested interest. More likely is what Congress did with the original deductible IRA: they will grandfather in any Roth assets but restrict future contributions in some way, such as means-testing. I could also see it becoming subject to the AMT.

Personally, I'm telling all my eligible clients to put $2K into a Roth.

[jmac]

: I was visiting with an employee of the IRS the other day and mentioned something about the Roth IRA to him. He told me that he would not be surprised if, at some point way in the future, congress decided to "change their minds" on the tax free status of Roth IRA earnings being withdrawn. My clients have voiced similar thoughts.

: What do the members of this forum think? And is there anything that could keep congress from changing their minds and taxing the earnings at some point in the future?


: I don't feel comfortable with the "trust me" position with the government. There have been too many examples in the past where they have changed their minds and altered the tax position.
I also feel that there are some good alternatives to the Roth IRA so why restrict my clients by having them at the mercy of whatever political winds are shifting at the time?

[jpjpjp]

: : I was visiting with an employee of the IRS the other day and mentioned something about the Roth IRA to him. He told me that he would not be surprised if, at some point way in the future, congress decided to "change their minds" on the tax free status of Roth IRA earnings being withdrawn. My clients have voiced similar thoughts.

: : What do the members of this forum think? And is there anything that could keep congress from changing their minds and taxing the earnings at some point in the future?

:
: : I don't feel comfortable with the "trust me" position with the government. There have been too many examples in the past where they have changed their minds and altered the tax position.
: I also feel that there are some good alternatives to the Roth IRA so why restrict my clients by having them at the mercy of whatever political winds are shifting at the time?

The first mistake is talking to someone from the IRS. The second is, the Roth has one of the greatest benefits, TAX FREE. This is almost to good to pass up.