As with all good parody, the elements of truth make it all the more effective. With the SS system crumbling before our very eyes, our rulers in DC will need to resort to creative (aka underhanded) strategies to keep it limping along a little longer, such as raising the age to claim benefits and denying any benefits to anyone considered to be evil rich.

From The Onion:

http://www.theonion.com/video_embed/?id=18377
Social Security Scam Robs Elderly By Convincing Them They Are Dead

Hilarious video of an attempt by a businessman to explain how businesses function to the economically illiterate occupant of the Oval Office.  Contains some salty but accurate language.

From FoxNews.com:

From Blog Comix

From the WSJ:

From Blog Comix

Ever since Roth IRAs were created as a method for people to save for their retirement years, I have been what feels like a lone voice cautioning everyone to be careful.  There have been tons of other financial advisors recommending that people convert their regular taxable IRA accounts to Roths in order to reap the promised tax free benefits decades down the road.  I recently received some press releases on books advising just such a scenario as the best route to retirement wealth. 

The very real problem with doing such a conversion is the fact that the value of the converted account has to be included in the current year’s taxable income and actual tax money has to be paid now.

I have been warning that trusting our rulers in DC to honor the tax free status of Roth IRAs is absolutely insane.  They have a very real track record of changing the rules after the fact on all kinds of things.  Social Security is a perfect example of this kind of reneging by our imperial rulers in DC.  When it was set up, the promise was that benefits would be completely free from income tax.  As most people know, that is not how it is currently, where 85% of benefits are taxed if the recipients are in the Evil Rich category, which is defined as more than $25,000 of gross income for an individual or $32,000 for a married couple. 

From the get-go, I have predicted that our rulers will find a way to instigate such a “means testing” law change for Roth IRAs, denying the tax free benefits for the evil rich.  I still believe that to be a very serious and likely possibility.

Another development in retirement planning that I haven’t discussed a lot in these blogs (but I have with my clients) are the growing and numerous schemes by our rulers in DC to literally confiscate private retirement plans and force them to be added to the bankrupt Social Security system, with its immoral limitations, such as the inability to leave to heirs.  I just finished listening to today’s Rush Limbaugh show, and he had an excellent discussion of this issue that should hopefully show up in this link.  I liked Rush’s discussion of this topic so much, that I created this PDF version of the transcript. 

My point of this piece is that, if you were to convert a conventional IRA to a Roth, pay the income taxes on that conversion, and then watch as the Feds confiscate your Roth money, you will be even more royally screwed than if you had just left your money in the conventional IRA and had it stolen by the crooks in DC.  Neither is a good outcome, but it would be adding insult to injury to pay taxes voluntarily and then have your retirement funds confiscated, or “nationalized” as some of this scheme’s Marxist proponents call it. 

Some recent articles on the Fed plans to steal private retirement funds:

Administration Advances Plan to Federalize Private Pension System

Republicans Sound Alarm on Administration Plan to Seize 401(k)s

From the latest IRS email newsletter:

IRS Begins Accepting Taxpayer Records in Electronic Format – 

I understand some tax pros are worried about the IRS’s plan to start using QuickBooks files during audits; but I’ve actually been looking forward to this for years now.  For all of the recent audits I have been handling, I have had to convert QB files to Excel and PDF formats for the auditors to use because they didn’t have the capability to use QB files directly. 

My understanding from speaking with auditors is that only one person in each IRS office is trained on how to work with QB; so it will be interesting to see how that knowledge is shared with other auditors in the office.

According to this announcement, they are using the QB 2010 program.  This means that for any client using an older version of QB (as many are), we will either need to update the data file to the 2010 format to be usable by the auditors, or they will accept older versions and do the updating to 2010 themselves.

As always, any real life stories from other tax pros on how QB files are being used with IRS will be appreciated.

The tarnished myth of “tax cuts for the rich.” – A concise look by Thomas Sowell at the truth regarding the effects of lowering marginal tax rates.  As he explains, anyone who claims such tax rate cuts increase the deficit is a lying sack of donkey poop.