Don’t say you haven’t been warned! The IRS publishes a ton of data showing you exactly the tax potential you face.
Here’s a chart I link to below that lays out for all to see the insane amount of money that rests in Traditional IRA, Sep IRA and Simple IRA plans at the end of 2015. All of it, just waiting to be taxed, from the first penny as ordinary income.
There are some surprises here though. IN 2015 there was actually more money contributed to Roth IRAs than Traditional. I was surprised to see that.
But those amounts are dwarfed by the gigantic amounts that were rolled INTO IRAs from employer sponsored plans, and the total amount of distributions from IRAs as well.
If the average American taking a distribution has an effective tax rate of just 10% that was BILLIONS of dollars in taxable income. BILLIONS!
And it’s only going to get worse as there are TRILLIONS of dollars in IRAs RIGHT NOW! Not even counting employer sponsored plans.
Don’t say you haven’t been warned.