Breaking Tax Free Promises
Posted by taxguru on January 26, 2015
Obama’s Blues for the Middle Class: Let’s Tax Withdrawals From 529 College Savings Accounts
This is another example of how our rulers in DC have no qualms about willy-nilly changing the tax laws and breaking promises of tax breaks. Some of you long term readers may recall how I was one of the few tax pros advising against people converting traditional IRAs to Roths and paying actual taxes now for promised future tax free withdrawals. I warned, just as with similar broken promises with Social Security benefits, our insane rulers in DC have a history of breaking these kinds of promises. I still believe that they will come up with some kind of “means testing” where anyone earning over a certain amount will be ineligible for tax free Roth withdrawals. That’s what they did with Social Security benefits.
Hopefully, the GOP Congress will prevent this kind of change to 529 plans for education; but this shows that it is in the realm of possibility.
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