THE GOVERNMENT IS NOT

PLANNING TO CONFISCATE YOUR

IRA
Monday, February 15, 2021
By Sarah Brenner, JD
Director of Retirement Education
Follow Us on Twitter: @theslottreport

Whenever there is a new administration there is a lot of uncertainty about what the
change will mean for retirement accounts. In 2021, this change is happening in the
middle of a pandemic that has upended the lives of most Americans and created
enormous economic and psychological stress. The result has been more speculation
about the future of retirement accounts than usual.

Accountants like to say that the tax code is written in pencil. This is certainly true of the
rules for retirement accounts. In recent years, we have seen the SECURE Act come
and completely upend the rules for inherited IRAs. We have also seen more favorable
rule changes over the years, such as the introduction of qualified charitable distributions
(QCDs), new exceptions to the 10% early distribution penalty, and expanded eligibility
for IRA and 401(k) contributions as well as for Roth conversions. The rules have
changed in the past and can change in the future. Tax rates too have gone up and
down in the past and will no doubt do so in the future.

Retirement account owners should always expect the possibility of change and stay up
to date on potential new legislation or guidance. What those saving for retirement
should not do, however, is panic. That is when retirement savings can be put in
jeopardy. The advice of a knowledgeable financial advisor who is current on the latest
developments can be very helpful in sorting through what is real and what is baseless
speculation.

An example of baseless speculation that has come up in the past and has recently
resurfaced is the claim that the government is planning to confiscate all IRAs and 401(k)
plans. This is simply not true. There is no evidence that this has ever been proposed
nor is it currently proposed. This type of rumor can be dangerous. An IRA owner who
believes this completely unfounded claim may take drastic actions such as withdrawing
funds or making risky investment choices that could leave her with large tax bills and no
retirement savings.

These are challenging times. The best thing retirement savers can do is stay informed
on any potential future rule changes. Plan proactively but stay calm. Stay up to date and
get good advice. Don’t let false information lead you into making panicked decisions
that could adversely affect your secure retirement.