Retirement Reform Blog

Several months ago, I wrote about the pros and cons of converting a traditional IRA to a Roth IRA (see Roth 2010:  Should You Convert?).  Beginning this year, any individual can convert to a Roth IRA and take two years to pay the taxes, regardless of household income level (in previous years, only those with household incomes below $100,000 annually could convert to a Roth).  Further research by “yours truly” indicates that a Roth conversion may be ideal for those who can pay the taxes on the converted amount and are still several years away from retirement (see my new NCPA publication, Should You Convert to a Roth IRA?).  After punching some numbers into ESPlanner, a financial planning software developed by NCPA senior fellow and Boston University economist Larry Kotlikoff, I found that the typical 40-year old couple can increase their living standard by as much as 15 percent at retirement by converting to a Roth now and continuing annual contributions to a Roth.  And who doesn’t want to have a fairly comfortable standard of living at retirement? Read the rest of this entry »

For those of you who have not had the opportunity to pick up a copy of the 2,074-page ObamaCare law (H.R. 3590) for some light reading, the National Center for Policy Analysis (NCPA) has published a short, two-page analysis on the new long-term care entitlement program discussed in the law (see “The New Long-Term Care Entitlement“). Read the rest of this entry »

Here we go again.  Panic in the stock market has set in, yet again, due to every direct or indirect domestic or international incident known to man.   Maybe Greece.   Maybe Senate-passed financial regulations.  Maybe unemployment.  Maybe somebody pressed the wrong button on their computer.  Or maybe somebody sneezed. Read the rest of this entry »

It just so happens that oddities are not only found at the circus.  Under ObamaCare, a variety of puzzling disincentives exist pertaining to its requirements and their effect on small businesses.  (For more information on how it works, read the new NCPA publication, Obama’s Tax on Job Creation.)

First, businesses with 50 or more workers will be required to offer health insurance and pay at least 60 percent of the premium for their employees or pay a fine of $2,000 per worker in lieu of providing insurance.  As observers have noted, the per worker fine will be less than the cost of paying 60 percent of a family or individual insurance policy.  This will be especially true in the coming years when premiums under ObamaCare are expected to skyrocket. Read the rest of this entry »

There have been many facts, fiction, analyses and opinions circulating on the possibility of a European-style value-added tax (VAT) becoming a reality in the United States.  Several online articles describe the VAT, how it works and the pros and cons.  (See Wilkipedia, European Taxation and Customs Union, and of course,  NCPA’s commentary and an additional editorial from the Wall Street Journal, to name a few).  Read the rest of this entry »

Who is going to pick me up?  Government, according to a new Gallup poll.  Among non-retired respondents, one-third expect to rely on Social Security as a “major source of income” at retirement.  This answer ranks second to retirement savings accounts, of which 45 percent cited as a major source of retirement income.  However, it has increased 7 percentage points since 2007 (when only 27 percent were relying on Social Security as a major source of income). Read the rest of this entry »

A few weeks ago, my 73-year-old mother received a letter from her internist announcing his retirement from the medical profession.  Being that the man is 78 years old, this comes as no suprise.  However, he had originally planned on working a few more years until he realized that Medicare reimbursements were not enough for him to stay afloat.  Now my parents are worried about finding a new doctor.  They think that further Medicare cuts resulting  from ObamaCare will create a shortage of doctors who are willing to take Medicare patients. Read the rest of this entry »

Last week I released a new publication about how taxing the wealthy hurts job creation and reduces the rate of return on capital investments.  In the Obama tax scheme, the “wealthy” are described as singles earning $200,000 or more and couples earning $250,000 or more.  Some may not really care that the wealthy will soon pay additional Medicare taxes on capital gains and dividends or face higher income tax brackets next year.  One might ask, what do those people have to do with the middle class?  Well, somebody needs to be spending a little discretionary income in order to keep the economic wheels spinning, and it appears that the top 20 percent of earners account for much of overall discretionary spending.

Read the rest of this entry »

Beginning in 2013, the recently passed health care reform bill will impose new Medicare  taxes on unearned income for single filers with adjusted gross incomes of  $200,000 a year or more and joint filers with AGIs of $250,000 a year or more.  The new 3.8 percent will apply to any rent, royalties, dividends or capital gains above those income thresholds.  This is in addition to regular capital gains and dividends taxes.  In a new brief analysis, I show the implications of the Medicare tax as well as Obama’s proposal to raise the capital gains tax for high-income earners (better known as the “wealthy”).   The bottom line is that these taxes will have the potential to reduce the after-tax rate of return on an investment by nearly one percentage point, or more than 10 percent. Read the rest of this entry »

An article about 401(k) plan fees caught my eye this morning.   It seems that employees are taking a more active role in fighting high 401(k) fund fees, whether it be through pressuring their employers to provide lower cost funds, or simply taking their employers to court over fee disclosures.  There has been concern from Congress over the past few years regarding plan fees, so no doubt this issue will be addressed by Congress eventually. Read the rest of this entry »