401(k) deductions are under attack and tax advantages of inherited IRAs are being eliminated, while retirees move to Ecuador to escape outrageous expenses.
After floating a trial balloon to see how the public would react to the elimination of 401(k) deductions or imposing immediate taxation on internal gains, similar to a campaign pledge to impose immediate taxation on internal gains of permanent life insurance policies issued starting in 2017, the Trump administration backpedaled and, after conferring, indicated that the 401(k) deduction would not be among the individual deductions eliminated by the Trump tax plan after all.
However, inherited IRAs may not be so lucky: under a Finance Committee proposal, IRA amounts that exceed $450,000 will be required to be distributed to the beneficiary within five years of the IRA owner’s death, subject to specific exceptions. Previously, the beneficiary of the IRA would have been able to stretch the distributions over his lifetime, continuing tax deferral on the IRA owner’s original contributions for that entire period.
Meanwhile, even while tax incentives for individual retirement savings are being whittled away by politicians who will be able to count on state-funded pensions and lucrative private-sector consulting gigs for their own retirement, Americans increasingly find retirement in the US to be an arithmetical impossibility. Consequently, American retirees are scattering to the four corners of Latin America in order to maintain their standard of living, and experiencing pushback from the locals as welfare states that depend on a high birthrate-to-immigration ratio buckle under their own weight.
