President Obama on Wednesday is expected to announce a plan that would prohibit individuals from reaping tax advantages on IRAs and other tax-preferred retirement accounts when the funds exceed $3 million.
By proposing the cap as part of its budget, the Obama administration is taking aim at those who stash many millions of dollars in tax-advantaged retirement accounts — which it argues is more than enough to retire comfortably.
A $3 million balance in a tax-preferred account like an IRA would currently allow a saver to finance an annuity of $205,000 per year in retirement. Removing the tax advantages for funds exceeding that threshold would save the government an estimated $9 billion over a decade, according to a senior administration official.
