Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-13-2012, 07:36 PM   #41
Thinks s/he gets paid by the post
Huston55's Avatar
 
Join Date: Jul 2011
Location: The Bay Area
Posts: 1,801
Quote:
Originally Posted by MichaelB View Post
One quote in the article stands out
I wonder how four generations can benefit from something that was only introduced in 1974 and cannot be passed along until the holder passes away.
Maybe that was from Congressman Hal Rogers; he's from eastern Kentucky.
__________________

__________________
You may be whatever you resolve to be.
Huston55 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-13-2012, 11:40 PM   #42
Recycles dryer sheets
Aeowyn's Avatar
 
Join Date: Jan 2011
Location: Scotts Hill, TN
Posts: 105
Quote:
Originally Posted by MichaelB View Post
One quote in the article stands out
I wonder how four generations can benefit from something that was only introduced in 1974 and cannot be passed along until the holder passes away.
They might be referring to a technique used to delay taxes as long as possible of: Instead of listing your child as a beneficiary of an IRA/401K, you list your grandchild or great grandchild (3rd/4th generation) as the beneficiary. The RMD is based on the age of the holder. The younger the beneficiary, the smaller the RMD - the longer you delay taxes.
__________________

__________________
Quit my J.O.B to become a farmer/rancher - December 2011
Now working part time from home on contract to support prior employer.
Aeowyn is offline   Reply With Quote
Old 02-14-2012, 05:16 AM   #43
Recycles dryer sheets
 
Join Date: Feb 2009
Location: Cville
Posts: 399
1) I would think that this issue of passing along tax deferred investments would be a good thing for Da Man. As long as the pot of $$ keeps growing so does the taxes to be collected. I mean come on, we are all willing to put $$ into an investment with expectation of a payoff down the road, so now that is a bad thing for Da Man ? He will get his one day and the more it grows the more he gets.

2) For Roth accounts, I would say it isn't tax free, taxes have been paid. That was the deal when I paid my taxes early on this.
__________________
RetireBy90 is offline   Reply With Quote
Old 02-14-2012, 06:47 AM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by BellBarbara View Post
Yes, but essentially the person who owned the IRA owes the tax. They should tax it when the entity cashes it out.

Everyone comes up with a reason not to pay the taxes, that is why our tax system is so messed up. The person got to defer while alive and working, when they die, the taxes should be paid, not shifted to others to pay.

My personal pet peeve are all these "reasons" people should get a pass on taxes. That is why those of us who work pay so much!
So, why have encourage saving in 401Ks or IRAs at all? Not enough people do that anyway, let's just punish those that do? Not sure where you are heading with this.......

I pay PLENTY of taxes, and have for MANY years........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-14-2012, 07:04 AM   #45
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,439
Quote:
Originally Posted by FinanceDude View Post
So, why have encourage saving in 401Ks or IRAs at all? Not enough people do that anyway, let's just punish those that do? Not sure where you are heading with this.......

I pay PLENTY of taxes, and have for MANY years........
We encourage saving through IRA and 401(k) so people will provide for their retirements. Not sure what punishment you are talking about. Thank you for paying plenty of taxes for many years.
__________________
MichaelB is online now   Reply With Quote
Old 02-14-2012, 07:48 AM   #46
Thinks s/he gets paid by the post
teejayevans's Avatar
 
Join Date: Sep 2006
Posts: 1,220
Quote:
Originally Posted by RetireBy90 View Post
1) I mean come on, we are all willing to put $$ into an investment with expectation of a payoff down the road, so now that is a bad thing for Da Man ? He will get his one day and the more it grows the more he gets.
Da man needs the money today, he has special interests to take care of, how dare you be so selfish , let the bill come due when they are out of office.
They have to raise taxes, because they can't stop spending, its just going to be a stealth tax here and there. Other ideas I've heard of:
Eliminate HSAs (Pelosi said they are a tax dodge ?!?)
Move starting RMDs from 70.5 to 65

Funny how they never talk about changing the insurance laws (VULs, ILITs, etc), probably has nothing to do with the insurance companies donations/lobbyists.
TJ
__________________
teejayevans is offline   Reply With Quote
Old 02-14-2012, 08:13 AM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by MichaelB View Post
We encourage saving through IRA and 401(k) so people will provide for their retirements. Not sure what punishment you are talking about. Thank you for paying plenty of taxes for many years.
Hopefully Congress finds something else to worry about.......... Why mess with the beneficiaries of inherited IRAs? They'll get the money at some point. This sounds like another one of those dumb ideas where Uncle Sam wants their money now. Remember the old conversion from IRA to Roth in the late 90's, where you could spread the taxes over 4 years? Only 25% of ALL eligible people took "advantage" of that "special deal". How did that work out for ya, Uncle Sam?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-14-2012, 08:50 AM   #48
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,925
Quote:
Originally Posted by MichaelB
One quote in the article stands out
I wonder how four generations can benefit from something that was only introduced in 1974 and cannot be passed along until the holder passes away.

originally posted by Aeowyn
They might be referring to a technique used to delay taxes as long as possible of: Instead of listing your child as a beneficiary of an IRA/401K, you list your grandchild or great grandchild (3rd/4th generation) as the beneficiary.

************************************************** *
...or perhaps you just have a compressed generation of 20 yrs of
shorter than normal longevity, say 65yrs and the original IRA owner
was older when the IRA was started. Also I think the original owner
is generation 1, so only 3 more generations needed.
__________________
kaneohe is offline   Reply With Quote
Old 02-14-2012, 09:18 AM   #49
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by kaneohe View Post
Quote:
Originally Posted by MichaelB
One quote in the article stands out
I wonder how four generations can benefit from something that was only introduced in 1974 and cannot be passed along until the holder passes away.

originally posted by Aeowyn
They might be referring to a technique used to delay taxes as long as possible of: Instead of listing your child as a beneficiary of an IRA/401K, you list your grandchild or great grandchild (3rd/4th generation) as the beneficiary.

************************************************** *
...or perhaps you just have a compressed generation of 20 yrs of
shorter than normal longevity, say 65yrs and the original IRA owner
was older when the IRA was started. Also I think the original owner
is generation 1, so only 3 more generations needed.
Did they consider community property states, like Wisconsin? The only way you can list someone other than your spouse as a primary beneficiary of an IRA is if they sign a form saying they're ok with that. Anyone think that might be a hard signature to get?

Typical Congress, again showing their lack of due diligence on financial matters that affect real people.......

I would say the majority of people in the US can't even do so-called "stretch IRAs" because they don't have enough other assets to afford retirement and give money to younger generations. What was the point again, to "raise" $4.5 billion a year when we are $15.4 TRILLION in the red? That's like looking for spare change on the ground to pay your $300,000 mortgage payment...........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 02-14-2012, 09:19 AM   #50
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
HFWR's Avatar
 
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 12,964
There are already rules for non-spousal beneficiaries regarding IRAs. It can't be kept sheltered indefinitely...
__________________
Have Funds, Will Retire

...not doing anything of true substance...
HFWR is offline   Reply With Quote
Old 02-14-2012, 09:38 AM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by FinanceDude View Post

Typical Congress, again showing their lack of due diligence on financial matters that affect real people.......
Congress is responsible for keeping lawyers and CPA's gainfully employed. Changes such as this are not intended to go after additional revenue so much as to keep estate plans in a state of flux and the so-called professionals who prepare them busy collecting hefty fees. Would you want Congress to drop the ball by allowing rules to stay in place so that a well done estate plan might last for many years? Do you want to see the children of lawyers and CPA's standing on the corner, cup in hand, begging for a few crumbs?

Complicated rules and never ending change are essential to the ongoing employment and business plans of legal and accounting firms.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 02-14-2012, 01:11 PM   #52
Recycles dryer sheets
 
Join Date: Dec 2011
Location: philadelphia
Posts: 106
Quote:
Originally Posted by Leonidas View Post
The ability to inherit these things is more modern than IRA's themselves (Bush II admin, I think) - a plum given to voters by the politicians to garner votes. Taking it away will be yet another political gesture to garner votes (just flipping of sentiment from "I deserve it" to "They don't deserve it").

Such things play well to some voters. Smart on the pols part - getting voters to argue over how to tax each other while they continue to get elected and spend the tax dollars foolishly. I'm not sure who is the greater prostitute in this scenario - them that sell their governing for a continued life of privilege at taxpayer expense, or them that sell their votes for a few dollars.

Well it is nice to know that we are all prostitutes here discussing tax policy. No one has ever accused me of being one before, but I have been accused of dating a few. First time for everything, I guess. LOL
__________________
james7 is offline   Reply With Quote
Old 02-14-2012, 01:52 PM   #53
Thinks s/he gets paid by the post
Leonidas's Avatar
 
Join Date: May 2006
Location: Where the stars at night are big and bright
Posts: 2,847
Quote:
Originally Posted by james7 View Post
Well it is nice to know that we are all prostitutes here discussing tax policy. No one has ever accused me of being one before, but I have been accused of dating a few. First time for everything, I guess. LOL
I wasn't directing my writing toward anything you wrote, but if you're self-identifying I am not going to stand in your way.

My objection to the concept continues to be that when we engage in tax policy to control people's behavior we have opened a door that probably should have been left shut. Most past efforts have bounced back and forth between being loved or vilified, depending on prevailing (and ever-changing) political climate. Not to mention the number of unintended consequences that many of these policies bring on.

This current look at inherited IRAs is more of the same, and politicians are playing it for all it's worth and some voters are happily swimming along with hooks in their mouth. Meanwhile, the real issues in spending and taxation policies continue to be unresolved.
__________________
There is no pleasure in having nothing to do; the fun is having lots to do and not doing it. - Andrew Jackson
Leonidas is offline   Reply With Quote
Old 02-14-2012, 05:09 PM   #54
Full time employment: Posting here.
 
Join Date: Nov 2010
Posts: 583
I don't like this rule. I pay relatively high taxes. I pay even more to fund my Roth IRA and Roth 401K mainly to pass to my wife, child and grandchild. As far as my family is concerned, if the IRS is going to tax this money as income, not only would this tax be a double tax, it would be a double tax at the highest possible rates on both.
__________________
devans0 is offline   Reply With Quote
Old 02-14-2012, 06:58 PM   #55
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,384
Quote:
Originally Posted by FinanceDude View Post
So, why have encourage saving in 401Ks or IRAs at all? Not enough people do that anyway, let's just punish those that do? Not sure where you are heading with this.......

I pay PLENTY of taxes, and have for MANY years........
The Cincinnati businesss daily did a poll asking if you paid more than your "fair share", your "fair share", or less than your "fair share". Contrary to all expectations, over 60 % felt they paid more than their fair share. Overall, if you pay any FIT, you are paying at least your fair share, as almost half of fllers pay zero. So why are they filing? Elementary my Dear Watson, to receive all the money that we have starting passing from taxpayers to non tax-paying filers over the last years.

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is online now   Reply With Quote
Old 02-14-2012, 07:15 PM   #56
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,242
Without arguing one way or the other, those who want to "change" the current way IRAs are passed/taxed, need to understand that no tax law change takes place in a vacuum. The original law was enacted to encourage participation in qualified plans. Taking away certain advantages previously built into the system will most likely reduce the number (and $ amount) of participation. I suppose you could argue that is good or bad, but originally, more participation was thought to be a good thing as it meant far fewer folks ended up with pocket lint for a retirement.

It affects me very little as most of my inheritance will go to charity. YMMV
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 02-14-2012, 07:45 PM   #57
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,816
I would have no trouble with all the deferred taxes on my IRA being due on my final FIT return. Similarly, I'd have no trouble with my heirs paying taxes on that money in the year they inherit it. I'm in favor of simpler tax laws, and either of those would be a simplification on the current system.

For that matter, I'd be fine with getting rid of the whole alphabet soup of special tax breaks for retirement saving.

Americans have this funny notion that the taxes should be primarily about the gov't bribing it's citizens to "do the right thing". I think taxes should be about funding the gov't.
__________________
Independent is offline   Reply With Quote
Old 02-14-2012, 07:55 PM   #58
Moderator
Sarah in SC's Avatar
 
Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,456
Traditional IRAs that are inherited after the decedent begins taking RMDs have to retain the same distributions, usually, unless it is a spousal rollover. And I've seen a few situations where the distribution is based on the life expectancy table of someone other than the beneficiary, when there have been disputes at the time of the estate settlement.
The conversion to a Roth has been a way for folks to go ahead and take the tax bite now, so their inheritors don't. I think that is reasonable for folks who want to do that. I imagine that taxing Roths would be a very unpopular move for our govt and therefore unlikely to occur.
__________________
“One day your life will flash before your eyes. Make sure it's worth watching.”
Gerard Arthur Way

Sarah in SC is offline   Reply With Quote
Old 02-14-2012, 08:13 PM   #59
Full time employment: Posting here.
 
Join Date: Nov 2010
Posts: 583
I wish that I was confident of congress not passing an unpopular tax. Relatively few people avail themselves to Roth's. Thus not many voters to complain. I really expect VAT at some later date.
__________________
devans0 is offline   Reply With Quote
Old 02-15-2012, 01:55 AM   #60
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,925
Quote:
Originally Posted by Sarah in SC View Post
Traditional IRAs that are inherited after the decedent begins taking RMDs have to retain the same distributions, usually, unless it is a spousal rollover. .
Sarah, according to this, it seems like it would be based on the age of the beneficiary so the RMD would be different from the original owner's?
https://personal.vanguard.com/us/wha...ranonspousermd
__________________

__________________
kaneohe is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Fed Warns Congress chinaco FIRE Related Public Policy 7 08-27-2011 08:07 AM

 

 
All times are GMT -6. The time now is 02:58 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.