Forbes columnist Deborah Jacobs argues that Roth IRAs should be curbed because they give outsized value to the super-rich while costing the government billions in tax revenue. Using the example of a serial Internet entrepreneur who put pre-IPO shares in a Roth IRA valued at $10 million on which he paid taxes, the shares are now worth almost $100 million. Not only will he not have to pay taxes on the gain, there is no minimum distribution requirement nor will his heirs owe anything. Venture capitalist and private equity partners also reap great rewards from Roth IRAs.
Jacobs proposes making wealthy Roth holders withdraw funds over $10 million annually and pay the taxes, plus requiring their heirs to pay taxes on amounts over $1 million. She is not optimistic that changes will happen because even though the government loses out in the long run, their budget horizon is 10 years and taking the money now is too attractive — even though it leaves future generations to foot the bill later.
