U.S. Sen. Ron Wyden (D-OR), chair of the Senate Finance Committee, and U.S. Rep. Richard E. Neal (D-MA), chair of the House Ways & Means Committee, recently released Joint Committee on Taxation (JCT) data regarding the prevalence of mega-IRA accounts.
“It is shocking, but not surprising, to see how the use of mega-IRA accounts by mega-millionaires and billionaires has exploded,” Wyden said. “IRAs were designed to provide retirement security to middle-class families, not allow the super wealthy to avoid paying taxes. This is the perfect example of what I’ve long called the tale of two tax codes.”
According to Wyden, there are 100 million Americans with no benefits in retirement plans or savings in retirement accounts like IRAs while the top 497 IRA owners have an average aggregate account balance of more than $150 million each.
“As the Finance Committee continues to develop proposals to make the tax code more fair, closing these loopholes will be a top priority,” he said.
The lawmakers cited JCT statistics detailing that, as of the 2019 tax year, over 28,000 taxpayers had aggregate IRA account balances of $5 million or more, and 497 taxpayers possessed aggregate IRA account balances of $25 million or more.
“These data indicate that the exploitation of IRAs is a growing problem,” Neal said. “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation. The Ways and Means Committee is already looking at strategies to ensure that this retirement savings tool isn’t misused as a tax shelter for folks at the very top.”
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