Big IRAs and 401(k)s are at risk: Where else to save?

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Federal budget could hurt retirement savings

We all could be doing a better job of socking money away in our 401(k) plans, yet the lucky few who are able to max out their accounts may be facing caps on their ability to save.

Proposals to stunt the growth of outsized retirement accounts have been under discussion in Washington for years. President Barack Obama's proposed budget for the 2017 fiscal year includes a provision that would require minimum distributions for Roth IRAs at age 70½. Another provision would require beneficiaries of deceased IRA owners (spouses excepted) to take distributions from inherited IRAs within five years.

As in previous years, the budget also called for a cap on 401(k) and IRA accounts, barring contributions and further accruals once balances hit $3.4 million.

And in June, the Bipartisan Policy Center, a Washington-based nonprofit that studies policy issues, proposed curbs on large retirement accounts, calling for a limit of $10 million per individual on 401(k) and IRA balances. The same group also proposed to end so-called stretch IRAs, a strategy where someone who inherits an IRA can continue to grow assets on a tax-deferred basis for years.