Andrew Yang’s Freedom Dividend proposed that the government provide a basic income to its citizens. An Inherited IRA or 401(k) actually DID provide an income to a parent’s children and grandchildren and DID provide generational wealth for families. This income was provided by all workers (including your parents and grandparents) with a traditional IRA, 401(k), 401(a), 403(b), 457, TSP, or SIMPLE plan upon their death. The revenue provision of the SECURE ACT obliterated this.
Repeal the revenue provision of the SECURE ACT that raises taxes $15.7 billion on the working class by changing defined contribution retirement plans (tradition IRA, 401(k), 401(a), 403(b), 457, TSP, and SIMPLE plans). This change shortened the distribution period to ten years upon the death of the retiree for the beneficiaries. The result of this change is to raise taxes on our children and grandchildren and deny them future income because of the shortened distribution period. As a result, this change strips families of generational wealth. This change will raise $15.7 billion in taxes over ten years (according to crsreports.congress.gov) and is a tax increase on workers and their families.
Why is this important?
These defined contribution plans became popular as a way for workers to save for their retirements by investing small amounts of money each year in a tax-deferred account using pre-tax money. When the retiree started taking distributions, the distributions were counted as ordinary income for tax purposes.
Upon the death of the retiree, the beneficiaries of the defined contribution plan would have to take the required minimum distribution every year and pay taxes on that distribution as ordinary income. Because these defined contribution plans would continue to grow tax-deferred, the distributions could continue for decades and could be passed on to the heirs of the beneficiaries. This was a great way for workers to acquire savings and pass those savings and the resultant income on to their children and grandchildren thus creating generational wealth.
This changed when the revenue provision of the SECURE ACT passed. Now, the distribution period is shortened to ten years. The effects of this change are two-fold. First, workers can no longer provide long-term savings and income to their children and grandchildren. Second, because the distribution period is shortened, more money is distributed so more money is taxed. Furthermore, the increased distribution will more than likely push the beneficiary into a higher tax bracket.
The rich get to leave their kids over $11,000,000 tax free with no restrictions. The working class get to leave their kids a tax increase. Furthermore, the rich get a $1 trillion tax cut over ten years because of the Trump Tax Act. This tax cut helped increase the federal deficit by 26% from 2018 to 2019. The rich get a $1 trillion tax cut. The working class get a $15.7 billion tax increase.
REPEAL THE REVENUE PROVISION OF THE SECURE ACT THAT IS A $15.7 BILLION TAX INCREASE FOR WORKERS AND THEIR FAMILIES.
The above comments are quoted from a petition drive by Move On…sign the petition HERE
