Hi, everybody. Welcome to the Great Retirement Debate. Jeff, what have we got today? Alright. Today, we've got a pretty juicy topic. And it's one that I know you get a lot of questions on I get a lot of questions on. Everybody gets a lot of questions on. And potentially, it's going to be a little politically divisive. Oh, okay. Alright. Right? It's always good to talk about politics, you know. We're gonna alienate half our audience today. Okay. Alright. No. The question is, can I trust the government to keep its word about the Roth or better yet should I trust the government to keep its word about the Roth IRA? You know, that question, I get in every consumer program because I talk all about the Roth. I love the Roth IRA because I love tax free. And people are in their programs. Oh, this sounds good. No RMDs. They love the Roth. Tax free, even tax free to beneficiaries. But then somebody always says, but exactly what Jeff said. At sometimes they're not as nice as the way you add. The way you asked it. They said, but can I trust the government to keep its word that they'll never tax Roth IRAs? And some of the older people bring up what do you think they bring up? It's gotta be social security. Right. Don't you remember? They said they would never tax Social Security. You can't trust these guys. So here's the answer to the question. Can you trust the government? The answer is absolutely not. I can't you can't trust them as far as you could throw the.. You can't trust them as far as you can throw them. There's an old CPA saying says tax laws are written in pencil. They change all the time. And if you notice, like, lately, they're changing every year. Yeah. It's been, a brutal number of years between the Tax Cut and Jobs Act and the Secure Act and Secure Act and Secure Act 2.0. Not to mention rulings and regulations that many people are not aware of that are under the radar. But really important still. Right? Lots of guidance comes out in them that is effectively while not law, has almost the same impact on society because these are the rules we go by because some of these laws are hit are written so hastily and haphazardly that it's not the IRS's fault. Their job is to, in English, somehow interpret what they think Congress had in mind before they ran home on December twenty ninth. Alright. So just, you know, our question for today is should I trust the government to keep its word about the Roth? Just so we're we're clear on what we're talking about here. Alright. It's what are what are we concerned that might change? What are some of the benefits of the roth that people might be worried about would change? Alright. So let's go through the benefits of the Roth. First of all, my answer is, for the most part, I'll give you my position. You may disagree. First, I'm saying, yes. You can try even using the phrase. You can't trust government. But, yes, I believe the roth.. Can I can I get that on I just wanna make sure that's fine? Oh, is the audio clear in one? Can we make sure we have them on record? Is is the tax free feature of a Roth safe? Is it safe? It reminds me of that movie. Remember movie? Marathon man. Before your time, is it safe? Right? That was the big question. Is it safe? Well, The Roth, it there's no question. The Roth is the best retirement account to own. The only question is, how much you're willing to pay to get it? So a lot of people have paid to get tax free a big benefit of the roth. Once you have it in the roth, that money is income tax free for the rest of your life and ten years beyond. Even under the secure act and the ten-year rule. No R and Ds during life. And new for 2024, No required minimum distributions on Roth four zero one ks either. So you'll have total control. You never have to take that money out. And if you do, it's generally going to be tax free. So most people say this is too good to be true. Isn't, is it Congress gonna eventually tax this? And here's why I say probably not. I'm gonna give you a little secret here. I'm gonna share one of my secrets. You know what Benjamin Franklin said about secrets? Three people can keep a secret if two of them are dead. I'm going to give you my secret. Congress secretly loves. I mean loves, loves, addicted to Roth IRAs. Why do I say that? Well, let's go back in time. You remember Jeff? 2010. Barely. I think I was four at the time. I was just yes. Yes. I remember 2010. And before 2010, who could convert to a Roth? Only people with lower income, which is actually the Congress doesn't really want to convert. Congress likes people with high income tax to convert to Roth. And they changed that. It used to be if your income exceeded a hundred thousand dollars, you could not convert to a Roth. But then as usual, Congress needed money, and they eliminated that limitation. And they saw boatloads of money coming in, including mine, including mine. I took that deal. I begged everybody to take that deal. And what was the deal? I'm gonna give you a question. Yeah. I converted everything in 2010. How much tax did I pay in 2010? Half of the income. Zero. Zero. I told you to sign up for that deal. You know what the deal was? If you converted in 2010, you pay zero tax in two thousand ten, half in eleven, and half in twelve. That's a good deal. The government gave every one. I was telling everybody there's an interest free loan to build a tax free savings account, but here's where Congress comes in. They saw boatloads of money coming in. They said, oh, this is a good revenue raiser. Mhmm. And then they started in. They start going in deep with the Roth and they started realizing, Hey, wait a minute. More Roth means more revenue for us. So they expanded Roth 401ks, Roth four zero three b's Roth workplace, plans. And I was going to say they tipped their hands, but they just gave the store away. They they told us what they really feel and secure two point o, where they went all in, I call it Rothomania, separate IRAs, simple Roth IRAs, five twenty nine to Roth matching contributions catch up contributions, Roth, Roth, Roth, moth, Roth. Yeah. They made Ross more available. They made roths more attractive. And one of the provisions was actually the first like, dipping of the toe, if you will, into the waters of forced rothification. Right? Those Right. With high income was supposed to start actually in 2024, but now has been pushed back to 2026. Those with high wages, specifically, are going to have to make any catch up contributions to raw thyroid. You don't have a choice. And, you know, Ed, a lot of times, you know, you mentioned every the, you know, the government and Congress likes bringing in new. Now there is a general difference between parties, right, without getting too into politics here. In general, But it's one thing that both parties agree on. Yep. That's exactly where I'm going. You know, Republicans usually like to lower taxes if they can with the revenue. You know, the everybody likes the revenue, I guess, is the point. Right? Republicans look and say we can lower tax rates with the revenue without increasing the deficit. Democrats might look and say, great. We have more revenue. We can create more social programs without increasing the deficit, but everybody sort of likes the revenue. And even this idea that Well, high income earners are now eligible to convert to Roth's in 2010, and high-income wage earners are going to be required. Some people might think, oh, that that's gotta be one of those, Democrat ideas. You know, I would remind folks that back in 2017, when Republicans had the White House, the Senate, and the House of Representatives. Full control over the US government and actually used that control to pass the Tax Cut and Jobs Act. They did so And up until about a month or so before they passed the bill, one of the things that they included in their draft legislation was force Rothification Right. For everything, not just the catch-up contributions, which was a change made by Secure Act 2.0. But everything. They were just gonna do away with pre-tax accounts. And why? Why? Because it would have allowed them to get more money now to pay for the other tax cuts that they wanted to include in their bill. And that so it's not a democratic thing. Like, let's have high earners pay for this. This was actually an idea that was really put forward initially, perhaps counter intuitively, by Republicans ultimately was removed from their final piece of legislation because it was so polit all together. People were screaming. They said, what? No more deductions for my 401k? That's right. And the four zero it's not a yeah. Every time I use the word deduction, the four zero one k. Somebody says, where do you deduct it out of the tax return? It's an exclusion from income. Same thing at the end of the day. It's actually better than a deduction because it comes off the off wages. So they the government, Congress, wanted to do away with pretax four zero one k contributions because it created a tax benefit, and they would lose revenue. And remember when I talked to you about the all the Roth Vacation, or I called Rothimania in Secure 2.0, I don't know if you ever saw the actual 2.0 bill. And I know you probably did because you go through it like I do. But If you look at the actual bill, which you can find online, secure 2.0, all of those Roth provisions that I just mentioned. And do I know where you're going with this or under a intersection. Yeah, or under a heading, the font of which is men walk on moon font. If you know what I mean? In 1969, that the font, the font, and it read revenue provision. So Congress just gave they said, no. We're doing it. We like the Roth because of the revenue it brings in. So that's why I think they're not gonna kill the golden goose. Luckily for us, Congress are the worst financial planners on earth because they're so short sighted. And they're required to be short sighted. Right? I think you're alluding to the fact that Congress looks at a ten year budget window. Right. Exactly. You or I, if I always say if we had clients that came in with, you know, mortgage, and it had a balloon payment in the eleventh year. Right? And the client said, I need a financial plan, and we showed them a financial plan where they were making their interest payments for ten years. Client turned to us and said, what happens in the eleventh year? We said, well, who cares? It's eleven years. We'd lose our jobs. Right? The client would say, what type of professional are you? And yet, not only does Congress act like that. A good example. Congress has to act like. Right. Right. They are required. So a lot of times people come up and they say, but aren't isn't Congress giving away the farm down the road. Right? Won't well, think about all the lost revenue that they won't have in the future. That's for a future contract. That's right. Some other Porsche love in the future is gonna have deal with that. Not Congress That's why, personally, I don't think they're gonna kill the golden goose. And here's why it creates revenue. They're using raw provisions to pay as Jeff said for everything else in the bill. So Roth IRA's or Roth four zero one case bring in money. They bring in revenue. The only money that can get into a Roth IRA is already tax money, so they get their money up front. So that's why I say don't worry about it. Now it could be, and this could be Congress could trim around the edges. Somehow include some raw factor into adjusted gross income or a modified adjusted grossing come if you take a Roth or levels of Roth, but I think if they go too far and kill the real tax free, income tax free benefit of the raw. They'll kill the golden goose, and I don't think they're gonna do that. In fact, I think they're gonna expand raw I agree. I think that that that that that that rothification of the Yeah. The catch up, I think we see that expand if anything else. Congress likes the roth to point. And, you know, just as we wrap up here, you know, a few other points, you mentioned you started the discussion kind of comparing this to Social Security. And one thing I I like to remind people is That was sort of a unspoken promise, if you will, that we're not gonna tax it. It wasn't really ingrained in the tax code. But people never forget. They don't forget. But the the the tax code does say if you do this, then your future revenue is tax free. So there is a lot of there are a lot of smart, constitutional experts out there who believe if they changed that, there would be some constitutional challenges to the yeah. You'd almost certainly see that grandfathered in. For some, I could see other changes happening in the future. For instance, when people say, can I trust the government to keep its word about the raw I like to separate it into two different areas. The tax-free element, which I think is gonna stick around Right. Because otherwise no one's gonna convert. And they'll get no revenue. That's right. And the RMD Issue. I think they could have RMDs at some point for Roth IRA. I could see that. That's what I call trimming around the edges. Yep. Yep. That's fair. But I also think who cares? Because Congress keeps pushing back the RMD age anyway, they start RMDs at 90. What difference does it make anyway? So I this is one area where you and I actually have a, a sincere and fundamental agreement on things that, yeah, if you're concerned that, you know, I guess nothing is is for sure. Right? Our our crystal balls are no less cloudy than anyone else's. But if I was thinking about if I was a retiree or I was getting ready to retire, and I was doing my planning of the seven 7462 things that might keep me up at night. This is probably 7425. Right? And it's low on the list of things that I'm worried about. It's a pretty good bet that Congress will always be looking for revenue. Alright. Well, what do you think? Let us know. Give us a shout. You can get to Ed on at @theslottreport on Twitter, you can reach myself at @CPAplanner. Let us know. Do you think you can trust the government when it comes to the Roth IRA? We'd love to hear from you. Ed, thanks for another fun discussion, and we'll see everyone real soon on the next Great Retirement Debate.