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Are New Roth IRA Conversion Rules Meant To Be A Short Term Fix For Government Funding?

22 February 2010 6 Comments

Government has loosened the rules making it possible for more people to convert their traditional IRAs and 401(k) funds into Roth IRAs.  This conversion essentially means you can pay taxes on the amount then convert it and not pay taxes on it again.

It seems to me that our sly politicians have found a way to boost the revenues for government in the short term.  Since the short term is all that matters when you’re a politician, why wouldn’t you want more Roth IRA conversions?  This doesn’t mean that it is a good thing for you and your money, but it’s surely a good thing for current politicians.

I’m so sick of the short term manipulations to try and keep the ship afloat now with total disregard to any long term strategic thinking.  What a disaster this whole thing is.

What do you think?  Do you think that government is allowing more Roth IRA conversions just to be “nice” or to allow more freedoms?  Unlikely in my opinion.  All policies have an agenda these days.  This is no exception.


  • bob said:

    Im sure you are right that it is a way to fill some of the gap in the budget, but I do think its a good thing for many investors. If you believe, which im sure you do based on your blog content, that taxes can only go up in the future in order to fund all of this spending then why wouldnt you want to pay taxes now at a lower rate? This strategy does not make sense for everyone, but it certainly does for a large number, so people should absolutely take the time to find out which camp they may be in.

  • 20smoney said:

    Hey bob, yeah you know I like Roths. I have one. I'm not sure people should take the hit though. I guess people will have to decide for themselves. I'd prefer to just fund a Roth from here on out in tandem with a 401k.

    Taxes up in the future? Yea probably. or at least the printing press will be wound up!

  • Andrew said:

    I think it is a great opportunity for individuals with long-time horizons to convert and benefit from tax-free compounding. I agree that investors must determine if the conversion is in their best interest. Our government must find ways to increase income and cut expenditures. The current debt levels are becoming quite concerning. Another fact to consider is that by decreasing the current debt less interest must be paid. At what point does the additional interest charges required to maintain the current debt overshadow the benefit of waiting to tax the retirement savings of Americans. I imagine even at the low yields of US Treasuries, 12.4 Trillion compounds rather unpleasantly.

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  • boxcutter10 said:

    Never knew about this. I'll have to read up more about it and see what I come up with. I'll keep playing CP using my club penguin codes because I love it!

  • blogc2011 said:

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