[quote user="Limoman"]KCallie> "
Roth IRAs were set up to help working people save part of their earnings now for retirement later, not to help retirees escape taxes on money they didn't earn. I don't see how you can call that a con game. IRAs were never intended to help retirees shield inheritances from taxes. They were intended to promote people saving earned income for retirement."
Re: Well, believe what you will, but I don't believe this part..mostly since Everyone who has $ is converting thru trad. IRA's to Roths to avoid taxes, avoid haivng to have to WD per the Trad. IRA schedule,etc.. But, yes on the Trad. IIRA's , seeing the Trad. IRA's were set up for the Working class due it only allowing $2k, yr to go into them.
[/quote]
You can't convert a traditional IRA to a Roth if your income is greater than 100k. And there is a cost for this - you pay the taxes on the converstion NOW and that means you lose the opportunity to make money on the money you paid in taxes. So this is a way for the government to get money now from you rather than later and that is the reason behind this rule. There is no similar advantage to the government in allowing someone to put an inheritance into a Roth. Where is the benefit to the government there???
So, why would a rule like you propose ever be adopted? No benefit to the government and it doesn't promote the saving of earned income for retirement (which is a benefit to the government because it reduces the risk all us tax payers will have to pay for medicaid nursing homes, medicaid supplements to medicare, SSI, etc) for people later in life. The only reason to allow it is to let retirees shield unearned income from taxes. What purpose is there to a rule like that (other than you pay less taxes simply because you were lucky enough to inherit money)?
[quote user="Limoman"]
Also, most that I know ( In my Class of earners of btwn $30-$50k yr ) that had Trad. IRA's? Ended up having to Tap into them thru -out the yrs for various reasons..and defeated the whole concept of them and paid even more taxes vs having a Taxable Account.
[/quote]
Sounds like that is a case of poor planning on their part if they had to tap into them. I have seen way too many people make irresponsible decisions and then use their IRAs to bail them out. Their problem is that they live beyond their means. Too many people have more children than they can afford to raise and then want the rest of us to subsidize them through child care credits, health subsidies, education subsidies, etc. I don't feel sorry for them and don't want to subsidize their life choices.
You want to have a greater disposible income? Don't have more children than you can afford to raise on your own.
[quote user="Limoman"]
And Another thing against IRA's in general? The Fed knew darn well, anyone using them( were the Upper income class that could afford them) were going to be in the Higher Tax Brackets when they retired, from haivng alot more $. .thus Wil be paying More Taxes after retiring and not less..
[/quote]
My parents were in the highest tax bracket when working and now are in a middle tax bracket so I don't think that is true for everyone. Their house is long ago paid for, cars are paid for, they take their RMDs and their SS income and live on that. Many people are in that situation later in life if they planned and saved responsibly.
[quote user="Limoman"]
If we are going to bail out all those Irresponsible Home owners? I want to own part of those Homes and in 10-20 yrs it will make me about 5x my $ back..Not just give it to them to break even...
[/quote]
I totally agree.