How Obama and McCain Want to Change Your Retirement Accounts
The subject of retirement accounts was briefly mentioned in the first question of last night's presidential debate. Barack Obama proposed penalty-free hardship withdrawals from IRAs and 401(k)'s, which are currently subject to a 10 percent early withdrawal penalty for those younger than age 59½ who need access to their retirement stash. Fifteen percent of the account—up to $10,000—may be withdrawn in 2008 (including retroactively) and 2009 but will still be subject to normal taxes.
Both Obama and John McCain's recently proposed economic plans will also allow retirees to avoid selling off their retirement assets while the market is at historic lows. Currently, annual withdrawals from traditional IRAs are required for everyone age 70½ or older. These required minimum distributions are taxed as income. Both senators have circulated proposals to temporarily suspend the required withdrawals for seniors over age 70½. This will allow flailing nest eggs more time to recover from recent market turbulence.
But some retirees need to tap their retirement accounts for immediate expenses and can't put off their distributions until the market improves. To help this group of retirees, both candidates plan to lower the tax rate on retirement account withdrawals, which are currently taxed as income. McCain will tax withdrawals from retirement accounts at the 10 percent rate up to the first $50,000 withdrawn. Obama will exempt from taxation any withdrawals made up to the required minimum amount.
Here's a look at how the economy is affecting baby boomer retirement.
Tell us, what else could the candidates do to help retirement savers?
Tags: presidential election 2008 | retirement | Barack Obama | John McCain
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Reader Comments
Helping Retirement Savers
The candidates should cause the Treasury to increase the dollar amount of I-Bonds that an individual can purchase each year (they lowered it from $30k to $5k last year) and increase the fixed I-Bond interest rate component from the ridiculous 0% where it is now. How does that encourage saving for retirement?
What I heard
When listening to the debate last night I heard what Obama was saying and kept hearing his words say one thing and the meaning of those words being totally different. In other words, Obama is lying to us. He wants to give all these tax credits and health care benefits and leave those with health care benefits as is. Those who will need the benefits from his plan will be effectively forcing those with to end up on the gov't plan due to their employers going out of business or downsizing due to the increased (massive) costs in taxes imposed to utilize and run that program. Fact: Gov't. never has and never will be an efficient entity ever. This goes for health care doubly. The insurers are jumping for joy right now. They are the true beneficiaries of any nationalized plan. They(insurers) will whine and moan all day long and at the same time we will never see them go hungry or lose their homes due to financial strife. NEVER has any insurer been without money. If they are and can show it on the books, follow them around and see just how poor he really is. He will go home to a nice house in a nicer vehicle to plenty to eat and all the same toys in the garage as were there last year. Back on track-Obama will put another generation in the poor house with his program that has to be paid for by workers who are already having a hard time just keeping themselves fed. His plan is completely unrealistic. He wants to put an inefficient, corrupt agency that does not exist as of yet in charge of our health care. He wants to allow the abortions that live to be afforded no chance at a life. How can anyone want this guy as president when he won't give the rights most of us give a dog to a third term living abortion. His answers to voter fraud and manipulation of voter registration were not acceptable. This is a guy who paid the group ACORN over 800,000 dollars to help their efforts. What ACORN does is to pay those workers a set amount of money for each voter registration card they turn in. There is no accountability to those cards, and as we are finding out, most if not all are fictitous persons made up in order to cast votes by non-existent people. These are facts, Obama is also good friends with a known terrorist. William Akers, he set off 25 bombs here in the US at the capoitol and pentagon and other places in our home land. Who also says he wishes he had set off more. Obama has had his political carrer almost entirely funded by foreigners with alterior motives. Those motives are not in our intrests as Americans. Those interests lie in socializing this country so as to limit freedoms and choice. To make the one place left on earth that freedom is afforded the citizens a thing of the past. Trust me on this one thing. Other countries don't hate America because of something America has done to them. They hate us because of the lies their governments have told them. Americans liberate and their gov't's. lose power and do not like it.
Save the negative accusations, please make the political tie to the subject--our retirement!
Both McCain and Obama had proposals to help with retirement withdrawals, or, leaving choice to those currently at the age for mandatory withdrawals,they would allow them to leave their money in until the market recovers (at least somewhat). But for those younger or older with retirement withdrawals, Obama's tax plan is clearly more fair for the middle class. I was getting ready to prepare for retirement before the current mess. Now I have to wait for the market to recover before I can begin re-distributing my money allocations.
I have to have insurance (depends on my job or my retirement). I do not trust McCain to ensure insurance for anyone--he sat through the senate de-regulation and lobbyist's writing the new laws governing insurance regulations and pharmaceutical companies fighting cheaper meds. Even if he didn't vote for the bill, he went along with those shenanigans during those 26 years.
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