Watchdogs = Truth

We need as many watchdogs as possible.  We heard over the weekend that hidden in Obama's newest proposed budget lies a change to Roth IRAs.  It doesn't sound like much of a change but it could be the beginning of a slippery slope.

This country needs independent watchdogs in the news.  Digging into the fine print, under covering truths, and sounding the alarm.

Now we can contribute (there are some income limits) to a Roth IRA with after tax $.  It is allowed to grow tax free and when we take it out (some age and time restrictions), it is all income tax free.  Another bonus is that we never have to take $ out.  Other traditional IRAs require us to take out and pay taxes on a minimum amount once we are 70 1/2 years old.

Obama has proposed that Roths now be subject to minimum required distributions at 70 1/2 like other IRAs. 

That doesn't sound revolutionary but it is the first step.  It opens the door to redefining these retirement arrangements, the first step to taxing the withdrawals like other traditional IRAs.  They would become similar to IRAs that have basis.

If income or other restrictions would not allow deductible contributions, you can contribute to an IRA with after tax $.  Basis.  The big headache with basis IRAs is that you must track the accumulated basis over the years.  Then when you take $ out of your IRAs, your taxable portion is reduced by the basis.

Bob and I have some basis $ in IRAs.  I have a spread sheet showing the year and the amount.  As we withdraw in the future, these numbers will figure into calculating the taxable portion.  In turn, the next year that number will be reduced by the portion used the prior year and so on.

I have contacted my senators and representative voicing opposition to Obama's budget based on the change to Roth IRAs.  I urge everyone to do the same.  The truth should be uncovered.

'til later