Roth Under Attack

Transcript

Mike:

We are going to talk about an absolute 180 degree change that’s happening in Washington, DC. And it has to do with your retirement accounts.

Mike:

Historically right? Historically the government in DC has been very, very eager to incentivize you to save money for your retirement. So for example, what are some of the incentives that they would give you? Number one, tax deductible deposits, meaning we’re going to let you deduct, when you put money into these programs up to certain limits, of course, we’re going to let you actually deduct it from your tax return. Second, we’re going to let you have tax deferred growth means, you know what? As your money grows, you don’t have to pay tax on the growth. Now, yes, you have to be taxed later on when you pull the money out. But as long as it’s in there, no taxes. And then number three, we’re going to let you invest in about anything. Meaning not only are you going to get all these cool tax benefits, you can invest in about anything you want, right?

Mike:

And so for years, and years and years, people been using these tools because it’s, this is great. I get a tax deduction, I get texted for growth and all that other good stuff. And I can invest in about anything I want just a few weeks ago. In fact, back in September, the house ways and means committee came out with some new ideas, we’ll call them, you know, the governor, the federal government, they want to spend 3.5 trillion and they have to pay for it somehow. Right? And so they’ve come up with all these new taxes and here’s what’s happening. They’ve come out. And they said, you know what? It is time to start attacking money in these IRAs and 401ks, you know, we said, Hey, you get tax deductible deposits. They’re actually saying, and there are certain people we’re not going to let you put money in these things at all tax deferred growth.

Mike:

They’re like, and you get to a certain amount of money in here. You don’t get to keep money in there anymore. You got to just, you can only have so much money in these things and invest in about anything back. Nope. At that. Either people are making smart choices and here’s what they’re doing. Okay. I have money in an IRA and that’s all great. But when you have money in an IRA, you have a business partner, you and the IRS and smart people say I don’t the IRS to be my partner. So they’re buying them out. How do you buy the IRS out of your IRA? Well, here’s what you do. You move this into a Roth IRA, right? Why? Because a Roth IRA, it’s all, tax-free, it’s all your money. There’s no partner. What happened in Washington, DC. They, you know, the politicians are saying, we need more money.

Mike:

And they’re looking out there in the landscape and they’re saying, holy crap, all these rules that they set up and they gave you, they said, oh, this is horrible. People are actually using these rules to their benefit. They’re actually growing money in these things. Then they’re, you know, they’re growing money in these accounts. Then they’re moving it all to Roth IRA. And they’re making these great choices for themselves. And we can’t have that. You know what? This is like, I remember one time I was with a big insurance company. I had car insurance with them and I paid extra money to have this coverage that, you know, if if a rock came off the highway and it cracked my windshield, they would just pay to have it replaced. And I remember I’m driving down the road and sure enough, a rock hits my windshield cracks it.

Mike:

I have it replaced, followed up with the insurance company. They paid for it. And then a few months later, I’ll be darned, the same thing happens again. So I again did the same thing. I used what I paid for, what happened? The insurance company dropped me. They said, we don’t want anyone who’s paying for this product to actually use it. We just want to receive the payments, but not have to pay out any benefits. That’s what’s going on here. Right? The IRS, the government, they’re saying, Hey, we’re giving you these benefits, you know, boom, boom, boom. We’re giving you these benefits and we’re giving you the ability to even move my Roth IRAs. But they don’t actually want you. You’re using that. It’s like, Hey use it, but just don’t make too much money. It’s almost like here’s a product they’re giving you. But if you use it too much, they want to drop you.

Mike:

That’s kind of what’s going on. Just like my car insurance. This is the first time that they’ve really come after all these 401ks and IRAs. What they’re telling you, all of this stuff here that they’re talking about only applies to rich people. What they’re not telling you is, if you look at how they do things, they float out an idea that they try to get past where it gets their foot in the door. So what’s likely going to happen if they get their foot in the door and say, this is only for rich people, but guess what? Then it’s only a matter of time before they start ratching rules down where it doesn’t apply just to rich people, but to everyday people like you and me, it is more important now than ever that you take steps to protect yourself. That might mean accelerating these Roth IRA conversions. It might be looking at things like maybe specially designed life insurance plans, by the way, harder for the IRS to mess with those are harder for our government to mess with those because those are contracts, not federal plans, different rules, right? It’s time. You’ve got to address this. That’s my message this week. I hope you found it. Helpful. Look forward talking to you again.

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