New reports indicate 497 high-income taxpayers had over $150 million in their individual retirement accounts, and nearly 25,000 taxpayers had aggregate IRA account balances of $5 million or more.
Senate Finance Committee chairman Ron Wyden, D-Oregon, and House Ways and Means Committee chairman Richard Neal, D-Massachusetts, released new data they had requested from Congress’s Joint Committee on Taxation on the prevalence of mega-IRA accounts. The numbers are based on tax year 2019 data.
The information updates an earlier report from the Government Accountability Office in 2014 that Wyden had requested. The 2014 GAO report, which used 2011 tax data, showed nearly 8,000 taxpayers had aggregate IRA account balances of $5 million or more. The latest numbers reveal a spike in the use of mega-IRAs. As of tax year 2019, nearly 25,000 taxpayers had aggregate IRA account balances of $5 million or more, a threefold increase since 2011.
The latest reports come in response to a series of articles by the investigative news site ProPublica, which got access to confidential IRS information and found that ultra-high net worth taxpayers were plowing millions and even billions of dollars into IRAs as a way to reduce their taxes. The reports also provoked a backlash among some Republican lawmakers, however, who are seeking the source of the leaks of private tax returns.
“It is shocking, but not surprising, to see how the use of mega-IRA accounts by mega-millionaires and billionaires has exploded,” Wyden said in a statement Wednesday. “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. On one hand, there are 100 million Americans with no benefits in retirement plans or savings in retirement accounts like IRAs. On the other hand, the top 497 IRA owners have an average aggregate account balance of more than $150 million each.”
He said the Senate Finance Committee is developing proposals to make the Tax Code fairer, and he planned to make ending the tax break a top priority.
The tax-writing House Ways and Means Committee is working on similar legislation. “This data indicates 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.”
