Obama budget to take aim at wealthy IRAs

President Obama’s budget, to be released next week, will limit how much wealthy individuals – like Mitt Romney – can keep in IRAs and other retirement accounts.

The proposal would save around $9 billion over a decade, a senior administration official said, while also bringing more fairness to the tax code.

{mosads}The senior administration official said that wealthy taxpayers can currently “accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”

Under the plan, a taxpayer’s tax-preferred retirement account, like an IRA, could not finance more than $205,000 per year of retirement – or right around $3 million this year.

Romney, Obama’s 2012 opponent, had an IRA several to many times that amount, leading to questions about how the former Massachusetts governor was able to squirrel away so much money in that sort of retirement account.

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The president’s budget, expected Wednesday, has several revenue-raising proposals that come as Democrats and Republicans continue to spar over whether more tax increases are needed to reduce deficits.

Obama’s framework also includes higher taxes on cigarettes, as a way to pay for expanded access to pre-kindergarten. Congressional tax writers in both parties and both chambers are currently examining the code in hopes of a broad tax-reform package.