Every day one reads about the burden of Baby Boomers going on Social Security and Medicare and getting out of the job market and how that will add to the debt and deficit.
Never once have I read this, or seen it from Washington or the media. This, being the ghost tax increase.
All of we senior citizens who jumped on the the great IRA benefit we were given by President Reagan, are now paying the piper. Seems everyone has forgotten the fine print in the IRA benefit. At age 70 1/2 one must start taking money out of one’s IRA. And, paying taxes on that money at existing tax rates. This has to be creating a huge flow of revenue to the US Treasury. Not to mention the stimulus to the economy the money creates after the taxes are paid.
Annual IRA rollover contributions should surpass $450 billion by 2017 as more baby boomers approach retirement age, Cerulli Associates reported this month
To my fellow seniors, who are always being ridiculed for being a drag on the economy, remember this ghost tax. A drag because we no longer work. A drag because we are asking our government to pay us back for all that money we kicked in to Medicare and Social Security for all those years. Money the government spent for government waste instead of investing to give us our benefits they promised when they took our money.
Don’t let our critics forget that we are now being forced to take money from both our contributory and rollover IRA’s. Money we many or may not need. And, we are paying taxes on that money we may or may not need. Plus, it seems no one notices that huge flow of revenue we are paying. I’ve tried to get data on what mandatory IRA withdrawal taxes generate and what the increases have been the last few years, but can’t find the data. But, it has to be huge. But, I was able to find these statistics.
IRA Withdrawals Are Likely to Continue Growing Rapidly Because of the Aging Population
Based on Internal Revenue Service tax and information returns.
Age group: Percentage of IRA owners within age group making a withdrawal:Percentage of aggregate IRA balance withdrawn.
Younger than 55: 9.6% made a withdrawal and 3.0% was withdrawn
55 to 59: 10.8% and 2.5%
60 to 64: 19.6% and 3.8%
65 to 69: 28.6% and 3.9%
70 or older: 93.0% and 6.5%
Note: Total IRA assets include traditional IRAs, Roth IRAs, and employer-sponsored IRAs (SIMPLE IRAs, SEP IRAs, and SAR-SEP IRAs).
Source: ICI tabulations of information from Internal Revenue Service Statistics of Income Division
Stand proud, fellow fossils, we are still paying more than our share to a sinking economy and a wounded country.
