Of those Americans who are planning their retirement with IRAs and 401ks, 90 percent of their lifetime savings resides in these accounts. It’s the money Americans are counting on having to support themselves in the final stage of life. They have trusted the Government and the system it created to help them with a retirement plan.
In the last 2 decades it has become painfully clear, the Federal Government has a financial problem. Social Security is near default, Medicare is unfunded, and Government debt and the interest on that debt is going to create a desperate need for money.
There is only one way a Government gets more money.
Looking at it from their perspective, where is the most visible, more accessible pool of money that exists in the American financial system at this very moment?
It’s the retirement savings that sits in the IRAs and 401ks.
The Federal Government employs actuaries who carefully review the money that sits in these plans to determine the timing of withdrawals, deaths, and growth on this money. They do this for exactly the reasons stated above.
They want to know when they are going to get the taxes due.
It’s almost as if they look at the money in these accounts as if it were their own. (In actuality much of it is theirs.)
They make the rules, they can change the rules.
#1 Most Dangerous IRS Form
It’s called the 5498 form.
It’s filed every year by IRA custodians to inform the Government how much you have in your account. Knowing these values it allows them to determine what their tax revenues will be.
Here’s the danger of this form and even having money in these plans.
If you are at all concerned about your privacy, and the Government knowing how much money you have, the 5498 lays it all out. If you are typical, then 90% of your savings is in Government computers. Remember, there have been numerous hacks on Government computers so there is a good chance someone besides the Government has this information.
As time moves forward, there will be more and more pressure to tax Americans.
Remember “means based testing”?
They will already have your information on retirement accounts and you can bet they will use it against you to collect more tax revenue.
Also, expect excise taxes to come back on larger withdrawals from your IRAs and 401ks.
The Government had a 15% excise tax on large withdrawals from IRAs back in the 1980’s. You can bet those are all on the table right now.
The 5498 form, IS the most dangerous IRS form when it comes to your financial security.