Certified Public Accountants are listening in on the conversation between Congress and the President about changes to 401(k) plans and IRAs. There is a lot of money earmarked for people’s retirements, and the government has its eye on potential tax revenue. In 2011, $4.86 billion was reported in IRA investments and $3.96 billion invested in defined contribution plans including 401(k)s. It is not surprising to hear that the government has taken note of these numbers.

Starting in October, President Obama will seek changes to IRA and 401(k) plans. The following are three examples where small business owners and individuals may be affected.

inherited IRAs

The president proposes that beneficiaries must withdraw money from the inherited IRA within 5 years of the owner’s death. At this time, non-spouses can withdraw money for their lifetime. Certain beneficiaries will be exempt from this new law, but the rest will be forced to withdraw larger amounts and face higher tax bills.

savings limit

The White House would like to see a savings limit on retirement accounts. When pooled, a person’s tax-deferred accounts producing a joint and 100% survivor annuity of $205,000 a year (currently requiring about $3.4 million) would be capped that would prohibit additional contributions. This change would not affect most people, and the caps could be lowered if interest rates rise.

Mandatory IRAs

Employers with more than 10 workers and who have been in business for more than two years would be required to automatically develop and enroll employees in IRAs. Payroll deductions would control contributions and employees would have to decide how much to take out with a default contribution set at 3%. The president’s proposal would create access to retirement plans for more people and give tax credits to employers who implement the plan. Many small businesses see it as one more burden to meet.

Depending on which side of the line you are on, these potential plans can be a win or lose solution. As with each of the plans listed above, they target a small percentage of taxpayers. The President’s plan for tax revenue from retirement accounts is not a general plan, but an approach to raise additional tax dollars from certain areas of retirement planning.

If you think you may be affected by these listed plans or others on the president’s agenda, call your CPA and find out how you can direct your financial goals in a positive way. If you are one of the employees of a small business and now you may have the opportunity to contribute to an IRA, your financial adviser will help you decide how much of your paycheck should go into it. The CPA will take into consideration your salary, your age, the size of your family and any other important issues shared to make the most of the retirement savings plan opportunity.

The president has proposed other plans in addition to these three mentioned above. Call your Certified Public Accountant today to see how you may be affected once the proposed plans become law.