Quote:
Originally posted by Mmmm, Burger (C.J.)
Are we talking about different things?
IRAs are revenue neutral, they just time shift the taxing.
Roth conversions move up the taxation event for those who chose it.
Having either--creating some tax advantage, encourages savings.
But I'm talking about how to pay now for a reduced tax base resulting from increased IRA/401k savigns. So, having increased the deferral of taxes by liberalizing IRAs, you claw back that money by giving others an incentive to pay the taxes now.
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Having lots of conversions to Roths would produce a windfall now but would have a detrimental effect on overall tax revenues, even if rates stay the same, because any post-conversion earnings would never be taxed.
Which is, I think, why they limit Roth IRAs and conversions to people who would on the whole be expected to have smaller accounts.
