Skip to main content
c908929c
Contributor ⭐
January 27, 2025

Double Taxation possible

  • January 27, 2025
  • 13 replies
  • 2944 views

Has anyone considered the chance of double taxation for retirees if income tax is replaced with a sales tax, VAT tax, or even tariffs. Most retirees have saved after tax dollars to a large degree, some cash, some Roths, and maybe some other methods. I have not read any articles on the ramifications to retirees. I am worried that the post income tax dollars we saved will be taxed again. This is something that needs to be watched and addressed. A change to national sales tax or similar tax without adjustments for after tax dollars means we will pay tax again on our savings. the only savings that won't be hit would be pretax savings. With the new administration this change could happen fast so please start writing your congress person now. The last flat tax bill presented suggest a percentage to cover income tax and FICA. Will the next one be similar? If so, haven't we already paid a lifetime of FICA? And haven't most retirees already paid income tax on earned money? I hope AARP can publish an article on this subject since the folks I have mentioned this to have not realized a possibility of double taxation even on a Roth account.      

    This topic has been closed for replies.

    13 replies

    BalbonisMoleskine
    Conversationalist ⭐⭐
    January 27, 2025

    It's inevitable that Roth distributions will be taxed. There's simply too much money there for Congress to ignore, especially with all the people doing Roth conversions over the past few years.

     

    Budget accordingly for these and other new taxes. 

    c908929cAuthor
    Contributor ⭐
    January 27, 2025

    I agree. But I wonder why the subject is never discussed since most financial gurus push folks toward Roth 401Ks and never mention the fact that a Roth is only good for the tax system we have today. The dangers of your contributions being taxed again is seldom if ever mentioned. Today there is a better chance than ever we could see the tax system changed.  

      BalbonisMoleskine
      Conversationalist ⭐⭐
      January 29, 2025

      If people don't realize that their Roth IRA or Roth 401(k) possibly or likely will be taxed in the future -- or used to means test their SS benefits -- then it's easier for financial advisers to sell them on putting money into those. And they aren't breaking any rules, legal or ethical, by doing so because they have no control over the federal tax code.

      GailL1
      GailL1
      Community Champion ⭐⭐⭐
      January 30, 2025

      WHAT???

      Any time one wants to SPEND money that they have saved that has already been taxed, the amount spent on a commodity that bears a sales tax, it is taxed again but in a different way.

       

      Actaully it is this way for even ones paycheck - you earn it , get paid, pay income tax on it and then go spend it and it is (sales) taxed.

       

      If you want to spend money that is in a ROTH account, where one has already paid income taxes on it, you take out the amount you want and then go spend it and if that item is applicable to sales tax like most things are - you pay the sales tax on the money you have taken from the ROTH.

       

      You are losing me with your logic here.

       

      IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna
      BalbonisMoleskine
      Conversationalist ⭐⭐
      January 30, 2025

      Yes, if you purchase something with money take from your Roth, you would pay sales taxes.

       

      I'm talking about a new, additional tax: When you pull money from a Roth, you would pay an income tax on that. 

       

      There's simply too much money in Roth accounts for Congress not to implement that new, additional tax. 

      Terms & ConditionsAccessibility statement