Fewer and fewer people have pensions today.
Those who work in the gig economy or run a small business don’t have the luxury of having someone else take care of their future. And with people living longer than ever before, the cost of retirement has skyrocketed.
For decades, people in the United States have been able to rely on investments in Individual Retirement Accounts (IRAs). Whether you choose to invest your pre-tax money in a traditional IRA or after-tax in a Roth IRA – enjoying tax-free gains in retirement – ordinary Americans have never had so many ways to save better for retirement.
Although many choose to invest their retirement in large index funds, a significant portion of investors choose a self-directed IRA, which allows them to specify exactly where their IRAs are invested. It could mean investing in a small local business, a family farm, or even areas of opportunity here in West Virginia.
Sadly, the House of Representatives passed IRA changes hidden in the Reconciliation Bill (this bill awaits Senate action) that would upend the investment decisions of millions of class-leading Americans. medium. As one of dozens of areas used to raise taxes, this action would abruptly change the rules on IRAs – on which millions of people have based their investment decisions.
The change would ban the conversion of after-tax contributions to Roth for many middle-class retirement savers.
Even more worrying, the changes would retroactively tax Americans’ retirement savings and give the IRS access to millions of IRAs for increased auditing, ignoring investment rules Congress has maintained for decades.
Another absurd proposal launched in the United States Senate would primarily target the middle class. Average Americans would no longer be able to use their self-directed IRAs to invest in entities without private equity – including small businesses, family farms, or alternative real estate investments – beyond 10%.
As a result, it would allow the government to force people to invest more in marketable securities like the stock market instead of private investments if it is passed.
This would force savers to shift more of their IRA investments to brokers on Wall Street rather than West Virginia entrepreneurs on Main Street.
Planning for retirement is a long game. Every time Congress changes the rules, people not only have to scramble to change plans that they have been in place for years, but they lose money as well.
Changes to retirement savings should be banned in Congress unless there is a bipartisan agreement on changes that would help middle-class savers rather than just attack them.
As negotiations continue in Washington, Senators Capito and Manchin are expected to stand up for hard workers in West Virginia and ensure that these damaging retirement changes are excluded from the reconciliation bill.
There is not enough investment in West Virginia as it is.
Any attempt to remove even more from the state would be devastating.
Senator W.Va. Charles Clements is Chairman of the Transport Committee and Deputy Chairman of the Pension Committee. It represents the 2nd Senate district which includes parts of the northern enclave.