Quote:
Originally posted by Mmmm, Burger (C.J.)
Why? Your tax base is income + savings withdrawals. If you know your saving money, then your tax bill goes down; if you know you're withdrawing, it goes up.
Right now if you withdraw from an IRA you have to pay 20% to the IRS right off, even if you put the money into another IRA. Same reporting; same payment--if you withdraw from your CSA, you get withheld. Crikey--old people get regular payments from their IRA now, as required by law. They seem to be able to figure out their taxes.
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Yes, old people get those payments, and the amount due in taxes is immediately known, or at least can be estimated with reasonable accuracy. Under your system, they need to calculate what they will have to set aside for taxes based on what they spend. While it might be possible to calculate what they will owe in advance -- though they would have to predict with accuracy just how much money they will spend between now and year-end, and god forbid something unexpected come up that drives that number up -- it is unlikely that most people would do this.
If you withdraw money from an IRA to put in another IRA, rather than doing a rollover, you are an idiot.
