As I have previously discussed, Obama’s budget proposal has been released and is being analyzed by many financial planners. Obama’s budget includes a provision to restrict retirement accounts such as IRAs and 401(k)s. Disallowing taxpayers from adding more tax-free money once the account limit is reached is the method the administration is planning on using to employ the restriction on retirement accounts. As a result, this provision may shift more affluent savers to put money into life insurance because tax deferred payouts are usually exempt from federal taxes. According to the CEO of Union Square Financial Partners LLC, the proposed restriction would make financial planners advise clients to reposition their assets into both life insurance policies and annuities.This budget is reported to lean on wealthy households to cut the deficit, and the retirement restriction proposal is one way to do so. Over the next ten years, this retirement restriction should raise 9 billion dollars.
See Zachary Tracer, Retirement Account Cap With Obana Budget Buoys Insurance, Financialplanning.com, Apr. 16, 2013.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
