Congress Proposes to Change IRA to Raise Tax Revenue

What Congress giveth, Congress taketh. IRA and other retirement savings vehicles are created by Congress to give incentives to save for retirement. The incentive is mainly through breaks in taxes. Apparently, this tax advantage has also been use for estate planning purposes for those who inherit IRA's from say, parents, can stretch out the distribution over a long time with tax breaks.

But in this economy, income for the U.S. government is also suffering because, in part, due to less taxes being collected. So, Congress is currently proposing to change part of the rules for IRA. Congress is apparently contemplating requiring that IRA distributions be made within five years for those who inherit the IRA. WSJ article here and Forbes article here issued last week explain the consequences of such proposal.

Well, I guess if we need to figure out ways to raise more money so our government isn't always running a deficit budget, one way to do it would be to tap into investment vehicles that were given tax breaks. The current proposal apparently would only affect inheritors of IRA. I just hope that Congress doesn't change IRA rules so that what I get from my IRA's and 401(k)'s during my lifetime would still enjoy the tax breaks when I retire.