High-income investors are about to enjoy a massive tax windfall from Uncle Sam. In just a few months, they’ll be able to convert their Individual Retirement Accounts--where investment earnings are taxable at withdrawal-- to Roth IRAs-- where they are tax-free. As financial planners are happily telling their big-ticket clients, this will be the gift that keeps on giving.    more »

When it comes to retirement savings, the recent stock market collapse has surely focused the mind. For years, we embraced the lovely, but ultimately absurd, idea that double-digit returns on equity investments would continue forever. Now, retirees-in-waiting must get their arms around a market that lost half of its value between June, 2008 and March of this year. In this gut-wrenching environment, how should we think about retirement savings? Harvard law professor Dan Halperin, a visiting scholar at TPC, has a provocative solution: He’d dump all tax-advantaged employer-based retirement savings plans and use the money—nearly $100 billion in 2009-- to enhance Social Security.    more »

Talk about a bad idea. Barack Obama and John McCain both want to give people tax incentives to empty their retirement savings accounts. They’d help contribute to a disastrous old age for many middle-class seniors, even as they provide a windfall to wealthy savers. In the name of relieving financial hardship caused by the economic slowdown, Obama would allow penalty-free withdrawals from 401(k)s, IRAs, and the like of up to $10,000 for the next two years. McCain’s plan, which is even worse, would cut the tax rate to 10 percent on up to $50,000 of withdrawals in both 2008 and 2009. Workers contribute pre-tax money into these accounts and, currently, withdrawals are taxed at rates up to 35 percent.    more »

As 401(k) plans and other defined contribution savings vehicles have become more popular in recent years, retirement experts have become increasingly worried about how workers can make these funds literally last a lifetime. Too often, retirees withdraw the money too quickly and end up outliving their savings or, worse, take the whole pot of cash and go off to buy that bass boat they’ve always wanted.    more »