LogFAQs > #980076052

The thing I dont understand about this is why the income tax threshold is so high ($1,000,000) but the investment tax threshold is so low ($400,000). Doesnt that investment tax apply to any 401k or IRA that retirees roll over? A million a year is a lot of money, and Im sure no one here would argue with that being taxed.

But, even if I personally have $0 retirement, $400k in a lifetime of working, saving, and investing doesnt sound like that much; especially with insane inflation. It seems like its specifically designed to punish people for trying to save up for retirement, especially in blue states where annual income is higher. I dont even think retiring in CA would be possible with less than $400k from investments, and then the government takes almost half of it?

I know there are the super rich who would be effected by their routine hundred thousand dollar investments, but adding a clause to give retirees a one time leniency seems like it would be a better way to go. Unless Im misunderstanding something here, then Id appreciate someone trying to politely clear it up.

Edit: I also dont mean this offensively, but Im wondering about a possible age gap. My understanding of retirement has changed drastically in the past two years as family and friends have gotten closer to that point.