Here’s a Wall Street Journal article on changes in pension plans http://cli.gs/MUSXME.
This is what spurred me to write today. The American public is taught about the great tax savings that retirement plans offer them. Don’t forget the two certainties in life, death and taxes. I’ll save that for a different post.
The regulation around the retirement planning can and will change randomly. In the 1980s the IRS saw fit to add an extra tax on to retirment plan withdrawals. You save your money into a ‘tax-benefit’ account such as a 401k, 403b, IRA, pension, etc. In most cases it’s your money to invest how you see fit. Do you control that money then? In order to receive these so-called ‘tax-benefits” you give the IRS permission to make rules to limit your access to your money. The IRS limits the access to your money for the first 59 1/2 years of your life and then forces you to access your money from age 70 1/2 on. During these restricted times the rules can change without notice. Your money might not be able to change with them. Maybe these time frames will change. What if tax rates go up? Anyone think that can happen?
Did anyone have any big losses in a tax qualified (retirement) account in 2008? In a regular investment account you might choose to deduct some of those losses. You would have that option. Not inside your retirement account.
One final thought…you become the perfect taxpayer with each dollar you put into a qualified retirement plan. All the money in that plan is 100% taxable at the rate the IRS decides. Could it be more perfect for them? How about for you?
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Check out this question on LinkedIn that is related http://cli.gs/LAstNL