IMPORTANT FEDERAL 2014 BUDGET PROPOSAL ALERT

Moments ago the President released the 2014 Budget which includes a proposal to cap the amount that can be accumulated in the total of a person's retirement accounts to $3 million.

 Here is the entire provision:

Prohibit Individuals from Accumulating Over $3 Million in Tax-Preferred Retirement Accounts.

Individual Retirement Accounts and other tax-preferred savings vehicles are intended to help middle class families save for retirement. But under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving. The Budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013. This proposal would raise $9 billion over 10 years.

Additional Information:

Treasury releases more details on the President’s budget proposal:

- $3 million Retirement Cap – the proposal would prohibit additional contributions once the balance exceeded $3 million, but the account balance could continue to grow. No funds would be forced out.

Additional Proposals:
- Limit the benefit of tax deductions to 28% – including contributions to IRAs and 401(k)s

- Eliminate RMDs for seniors who have $75,000 or less in their IRAs

 - Allow non-spouse beneficiaries to do 60-day IRA rollovers – currently a non-spouse beneficiary cannot do a rollover.

- Eliminate the stretch IRA – OUCH!
Retirement plan funds will have to be withdrawn under the 5-year rule.  All funds would have to be withdrawn by the end of the 5^th year following the year of death.