President Barack Obama wants to prevent people from accumulating too much money in their tax- advantaged retirement accounts or trusts for heirs, adding to pressure on the wealthy after raising tax rates in January. Obama’s 2014 budget proposal would increase estate taxes and limit techniques used by the wealthy to transfer assets through trusts.
The plan also caps at $3.4 million the amount individuals can amass in tax-preferred individual retirement accounts and requires those who inherit IRAs to take taxable distributions within five years instead of over their lifespan. Financial planners and tax professionals said such changes could mean big headaches for individuals, especially the wealthy, as they plan for retirement or strategize about passing on assets to their heirs.
“We are going to penalize people for being diligent about their planning and their saving and for accumulating wealth,” Wealth Planning and Preservation Partner David Scott Sloan said of the proposals. “If you save too much, we’re going to tax it.”
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