On IRAs and Congress

Bear with me, as I have to set the stage on something that has been on my mind for a long time.

In a world where too many people think of Social Security checks as retirement income, Individual Retirement Accounts (IRAs) are a good thing. The Employee Retirement Income Security Act (ERISA) brought us traditional IRAs in 1974. The Taxpayer Relief Act of 1997 tossed Roth IRAs into the retirement planning mix. Because ERISA was primarily aimed at pension programs, various amendments through the years have given small business owners additional options as Simple IRAs and Simplified Employee Pension (SEP) IRAs.

Primarily for executives, 401k plans appeared in 1978 allowing employees to defer compensation. Various amendments through the years expanded 401k opportunities to more people. Bottom line is that multiple opportunities exist to save for the retirement years.

It’s understandable that all these accounts come with rules for the owners: rules about contribution limits, tax obligations, withdrawal procedures, and various penalties for early withdrawal. For the life of me, one rule gets under my skin.

For whatever reason (either special interest or to get someone’s vote), Congress limited IRA contributions by qualifying contributors by income. In other words, those above a certain income cannot contribute to their IRA or they can only contribute a reduced amount.

What were the Capitol Hill nimrods thinking? IRAs should be available for every American. If he chooses, Bill Gates should be able to contribute to an IRA just like Joe Schmuck. I’ll take it one step further. Every American (if they so choose) should be able to maximize contributions into both the traditional and Roth IRAs regardless of income and availability of 401k plans – Period – thus eliminating the need for if-then statements and making the law easier to understand!

Retirement plans are just another example of Congress screwing up a good idea with unnecessary regulations – Damn jackwagons.