Originally posted on CUInsight.com.
Guest post written by Dennis Zuehlke, Compliance Manager, Ascensus.
Ascensus is the NAFCU Services Preferred Partner for IRA, Retirement Plan, and Health Savings Account (HSA) Solutions Software, Training, Documents and Consulting.
The Obama Administration has proposed a cap of $3 million on IRAs and retirement savings plans in order to raise $9 billion of additional revenue over the next 10 years. This is the first time that the Obama Administration has proposed a cap on the total amount of assets that can be accumulated in IRAs and retirement savings plans held by individuals. It comes on the heels of the Administration’s proposals in last year’s budget to reduce the tax incentives for making retirement plan and IRA contributions.
The Administration released details of the proposal in the Fiscal Year 2014 Revenue Proposals. Under this new proposal, contributions to tax-advantaged retirement savings plans (such as IRAs, 401(a) plans, 403(b) plans, and funded section 457(b) governmental plans) would be prohibited for individuals who have accumulated assets past a certain threshold. That threshold is the amount necessary to provide the maximum annuity permitted for a tax-qualified defined benefit plan (currently $205,000), which, for an individual age 62 in 2013, would be approximately $3.4 million.