Home › Forums › Financial Markets/Economics › OT: 529 change proposal
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joec.
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January 23, 2015 at 12:32 PM #782279January 23, 2015 at 12:54 PM #782280
FlyerInHi
GuestAN, you can call it whatever you want.
But it’s not like rules change overnight that you can’t plan.
Life is fluid and estate planning is a continuous process mostly because changing personal circumstances. Nothing to get riled up about.
On Obama Care, it depend what your view is. Considering that universal health care is taken for granted in the developed world, the US was bound to implement something sooner or later. In that context, Obama Care is just a patch to the old system.
January 23, 2015 at 1:10 PM #782281an
Participant[quote=FlyerInHi]AN, you can call it whatever you want.
But it’s not like rules change overnight that you can’t plan.
Life is fluid and estate planning is a continuous process mostly because changing personal circumstances. Nothing to get riled up about.
On Obama Care, it depend what your view is. Considering that universal health care is taken for granted in the developed world, the US was bound to implement something sooner or later. In that context, Obama Care is just a patch to the old system.[/quote]I never said rules doesn’t change. In fact, that’s exactly what I said. It’s within the realm of possibility that we can get “Roth” tax free gain rule be changed retroactively. I pointed out that when you have Democrat super majority in both chamber and the presidency, it’s likely that it will happen.
If you call Obamacare a patch and incremental, then the change in Roth rules would be an even more minor patch and there’s no point in arguing that it can’t happen.
January 23, 2015 at 1:12 PM #782283GuestAnything can happen. But you plan based on likelihood. Same with buying a house, getting married, etc…
January 23, 2015 at 1:21 PM #782284Participant[quote=FlyerInHi]Anything can happen. But you plan based on likelihood. Same with buying a house, getting married, etc…[/quote]I wasn’t talking about planning. If you’re talking about planning, then I would say diversify your tax accounts just like you diversify your investment. Anything could happen between now and when you retire/die, so why put all your egg in one basket. But planning wasn’t even a topic of discussion.
As I stated, if this was proposed now, then there is a likelihood it will be proposed again, until it passes. If this passes, then there’s a likely hood the same can happen to Roth IRA/401k. After, it’s just a minor incremental change relatively. The people who invest in 529 are also the people who invest in Roth. Democrat obviously have no issue with attacking this group of people now, so it’s reasonable to assume they’ll do it again in the future.
January 23, 2015 at 1:25 PM #782285GuestSo what if certain things pass eventually? Even if it does and you invested in the plan, you still had some tax benefits for some time.
I believe the point flu and livin’ were making was that there are certain things you can’t rely on. But what in life can you rely on forever and ever?
Think of it this way: “it was good while it lasted.”
January 23, 2015 at 1:26 PM #782286Participant[quote=FlyerInHi]So what if certain things pass eventually? Even if it does and you invested in the plan, you still had some tax benefits for some time.
I believe the point flu and livin’ were making was that there are certain things you can’t rely on.
Think of it this way: “it was good while it lasted.”[/quote]It would only be “good while it lasted” if they didn’t make it retroactive and if you’ve already taken some money out. If they make it retroactive and you haven’t taken money out yet, then there is no tax benefit.
January 23, 2015 at 1:34 PM #782288GuestIf, if, if…. so you don’t do anything only if?
Nothing is 100% ironclad. Same thing buying a house or getting married. People may lose big time getting married, but they still do it.
January 23, 2015 at 1:43 PM #782290Participant[quote=FlyerInHi]If, if, if…. so you don’t do anything only if?
Nothing is 100% ironclad. Same thing buying a house or getting married. People may lose big time getting married, but they still do it.[/quote]What’s your point exactly? Who ever said anything about 100% ironclad? I hope you know you’re arguing my point. Your initial statement of it not likely to happen is closer to 100% ironclad than my argument that there’s a likelihood that it will happen.
January 23, 2015 at 4:56 PM #782293GuestAN, wait 5 or 10 years and you’ll know who’s right.
Anything can happen. So you act on your information.
If you don’t want to invest in tax deferred plans, then it’s up to you. I say it’s good as long as it lasts.
edit:
AN, actually, upon more reflection on your argument, I believe that you’re right. Given enough time, the likelihood of tax laws changing is pretty high. But you have to look at a practical time frame that is useful to you. If you’re investing for college, you’re looking at a 20 year time period, or maybe less depending on when you start investing and how many kids you have.If you’re buying a house, with refinancing and moving up, 30 to 50 years is the practical time frame. Given enough time, the likelihood of the mortgage interest deduction going away is pretty high. But it’s good while it lasts.
January 23, 2015 at 7:48 PM #782298SK in CV
Participant[quote=AN][quote=FlyerInHi]AN, you can call it whatever you want.
But it’s not like rules change overnight that you can’t plan.
Life is fluid and estate planning is a continuous process mostly because changing personal circumstances. Nothing to get riled up about.
On Obama Care, it depend what your view is. Considering that universal health care is taken for granted in the developed world, the US was bound to implement something sooner or later. In that context, Obama Care is just a patch to the old system.[/quote]I never said rules doesn’t change. In fact, that’s exactly what I said. It’s within the realm of possibility that we can get “Roth” tax free gain rule be changed retroactively. I pointed out that when you have Democrat super majority in both chamber and the presidency, it’s likely that it will happen.
If you call Obamacare a patch and incremental, then the change in Roth rules would be an even more minor patch and there’s no point in arguing that it can’t happen.[/quote]
When in the state of California has a super-majority of either party has passed a retroactive tax increase? (Please note, your previous example of Proposition 30 doesn’t qualify.)
It’s not likely it will happen. For one, there hasn’t been a super-majority in congress for decades. The likelihood of it happening any time in the next couple decades is slim. And second, I can’t recall a retroactive tax increase being suggested in the last 40 years. (It did happen once. During either late in the Reagan administration or early Bush I administration. Congress quickly fixed it.) If it’s ever happened at the federal level and stuck. Creating precedent like that is almost impossible without a super-majority.
Beyond that, nobody is even suggesting removing the current tax benefits of deferred taxes for things like 401Ks, Roths or IRA, much less the future benefits of those accounts. Nothing like that has ever happened before.
January 23, 2015 at 9:45 PM #782299Participant[quote=SK in CV]When in the state of California has a super-majority of either party has passed a retroactive tax increase? (Please note, your previous example of Proposition 30 doesn’t qualify.) [/quote]Because they were too busy trying to pass shit like SCA-5. Luckily, they didn’t have super-majority for long. But I expect it to happen again.
[quote=SK in CV]It’s not likely it will happen. For one, there hasn’t been a super-majority in congress for decades. The likelihood of it happening any time in the next couple decades is slim. And second, I can’t recall a retroactive tax increase being suggested in the last 40 years. (It did happen once. During either late in the Reagan administration or early Bush I administration. Congress quickly fixed it.) If it’s ever happened at the federal level and stuck. Creating precedent like that is almost impossible without a super-majority.
Beyond that, nobody is even suggesting removing the current tax benefits of deferred taxes for things like 401Ks, Roths or IRA, much less the future benefits of those accounts. Nothing like that has ever happened before.[/quote]Just because it didn’t happen before doesn’t mean it can’t happen in the future. If a charismatic president who want to increase SS benefits and pay for it by completely eliminating 401k/IRA retroactively. I can see that gaining populous support. Especially if they can frame it as helping the poor and middle class by increasing SS by making the rich pay a little more, by just removing tax break that rich people don’t need. I see that as a very possible scenario. We’ll just have to wait and see.
January 24, 2015 at 1:06 AM #782301CA renter
Participant[quote=flu]I wonder why Obama/Democrats didn’t go after the carried interest loophole that hedge funds and private equity managers enjoy…
I wonder why Obama/Democrats didn’t listen to Warren Buffett and try to propose the “Buffett Rule”, which would have been an explicit tax on the “rich”
Instead, they want to tax the 529 plan? Really?….[/quote]
Could not agree more. The fairest and most effective way to reform our tax structure would be to make everyone pay the exact same steeply progressive rates on ALL types of income.
There is no good reason for gamblers and speculators (including hedge fund managers) to have a lower tax rate than people who work for a living. This type of reform would win broad support, IMO, and be much more in line with the claim that they want “the rich” to pay their fair share.
January 24, 2015 at 6:21 AM #782303
CoronitaParticipantUncle Sam Is Coming After Your Savings
Lol…
“As I noted then, this proposal is not going anywhere, not just because Republican congressmen will block it, but because it would be very unpopular with affluent blue-state voters who currently vote for Democrats. About the only people I saw defending this particular idea were blue-state singles who haven’t yet confronted the monstrous expense of shepherding their progeny into the new mandarin class to which they belong.”
Also
http://blogs.wsj.com/washwire/2015/01/23/making-sense-of-the-uproar-over-obamas-529-proposal/
January 24, 2015 at 7:23 AM #782304Participant[quote=AN]
Just because it didn’t happen before doesn’t mean it can’t happen in the future. If a charismatic president who want to increase SS benefits and pay for it by completely eliminating 401k/IRA retroactively. I can see that gaining populous support. Especially if they can frame it as helping the poor and middle class by increasing SS by making the rich pay a little more, by just removing tax break that rich people don’t need. I see that as a very possible scenario. We’ll just have to wait and see.[/quote]You’re arguing that the existence of some mythical boogeyman may come and take your money. That boogeyman doesn’t exist. No presidential candidate has ever proposed those changes. It’s like worrying about vampires or the living dead. Rand Paul being elected, and the US returning to the gold standard is much more likely. Do you think that’s likely to happen?
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