EO to Raise RMD Age ?!

[bada bing]

Yup, the government hasn't changed the rules, they are holding their end of the bargain.

The deal was access at 59.5 and mandatory at 70.5, not "as little as Helena needs to pay zero tax forever"

To play the devil's advocate:
Except that the government has and does change the rules all the time. The rules we live under have changed enormously in my lifetime. Try planning on future tax rates 10-20-30 years out. You can not do it. The idea that there is some contract that is unchanging in all particulars is false. The fact that currently taxes have been lowered doesn't change that it isn't permanent or guaranteed. Why would the ages for starting RMDs be the only factor in a complex tax equation seen as immutable ?

One common cause of all these seemingly unrelated discussions over OPT (other people's taxes) is the progressive tax system that's chock full of loopholes. If we moved towards a flat(ish) tax system without write offs, a lot of the argument over who is going to pay for it could go away and we could get to the more productive discussion of how much government we collectively want.

 

[gayl]

Only problem is that the RMD is not injust, it's just that you now don't like the deal that you signed up for long ago.

+1

 

[gayl]

There are lots of injustices government causes... and hopefully corrects.... over time.

How about slavery? Ironically, that is akin to serfdom that I mentioned previously.

How about the tax on Social Security that was enacted decades after SS began?

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It is unfortunate that you invested in a tax-deferred IRA instead if a Roth but how does the IRS eventually collecting income tax on deferred income equate to slavery?

 

[bingybear]

It is unfortunate that you invested in a tax-deferred IRA instead if a Roth but how does the IRS eventually collecting income tax on deferred income equate to slavery?

Just do roth conversions. Does that not solve RMDs at least until a non-spouse inherits.

 

[Helena]

It is unfortunate that you invested in a tax-deferred IRA instead if a Roth...

My IRA is a rollover of my company's traditional 401K. My company did not offer a Roth.

I also have a separate Roth.

... how does the IRS eventually collecting income tax on deferred income equate to slavery?

Any forced taxation, even by a legal authority, is a form of slavery.

.

 

[joeea]

The problem is the RMD that FORCES you to take out an amount the government dictates every year... and every year that amount changes... and if the elderly person does not calculate correctly and does not take out the correct government mandated amount, the IRS will fine him 50% of the error. Amazing how many think that is a wonderful burden to force on old people.

Nobody has ever been forced to defer paying taxes. It's a choice.

If someone doesn't understand how that works, don't defer - pay them up front.

 

[gayl]

Ive heard Schwab tells you how much to take out. And they have an amazingly simple calculator .... do you say that they are alone in that?

Bottom line: it's not rocket science. Let it grow tax deferred and then spend or convert

 

[NW-Bound]

Nobody has ever been forced to defer paying taxes. It's a choice...

I want to defer if I think I (or my heirs) will be in a lower tax bracket than I am now.

I want to pay now if I think I (or my heirs) will be in a higher tax bracket than I am now.

Yes, I am selfish, and my decision is all about me and my taxes.

 

[Helena]

.

To make a contented slave, you must make a thoughtless one. It is necessary to darken his moral and mental vision, and, as far as possible, to annihilate his power of reason. He must be able to detect no inconsistencies in slavery. The man that takes his earnings, must be able to convince him that he has a perfect right to do so.

.

 

[RobbieB]

Wow.

So you think the government has made you a slave because you have to take RMD?

Amazing.

 

[gayl]

Any forced taxation, even by a legal authority, is a form of slavery.

.

Sour grapes. We both know it isn't slavery

 

[pb4uski]

Wow.

So you think the government has made you a slave because you have to take RMD?

Amazing.

I was thinking warped, but same difference.

 

[NW-Bound]

Heck, I thought it was slavery when I could not get access to my IRA/401k till 59-1/2.

It turned out to be a blessing in disguise, because it was a factor in my working till 2012.

Had I quit work earlier when my children were still in college, I would deplete my stash more during the 2008-2009 Great Recession.

 

[gayl]

I've heard about people like Helena. You know, the ones that think that the military gets paid out of imaginary money, that somehow there is a revolving paper mill that prints up all the money needed to pay police, fire, public health, roads, and everything else that it takes to keep a government running. That somehow FEMA and everyone else just comes out of imaginary money in the air. Without realizing that you and I, that would be all the taxpayers, are the ones who actually pay for this stuff. It's not slavery to pay my fair share. I willingly entered into an agreement with the IRS when I deferred taxes on earnings. When rmd comes due I will gladly pay my fair share. I do wish that the factor would be changed as I think it handles life expectancy up to about 90. My family lives longer than that. But if I don't need the money I can easily just take it out of my IRA, pay my taxes due, and stick the remainder into my brokerage account. It's not difficult

 

[Helena]

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The US government managed a long time before any income tax existed. Lincoln enacted an income tax in 1861 to pay for the civil war. In 1871 congress repealed Lincoln's income tax. The income tax as we know it today, began in the 20th century.

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[copyright1997reloaded]

This thread is a microcosm of our post 2016 country of anything proposed or talked about by Trump. Here we have an EO that essentially does nothing but ask that the life expectancy tables be examined and possibly extended to better reflect longevity. One might think that people here would see that as a good thing, even those of you super duper smarter than everyone else who have been able to take money out early to manage the eventual RMD considerations. But instead....

[The other part of the EO, trying to encourage 401k plans for small businesses...I would think that in normal times most people here would also think that it is a good idea. ]

 

[street]

Two things sure in life and that is death and taxes.

 

[pb4uski]

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The US government managed a long time before any income tax existed. Lincoln enacted an income tax in 1861 to pay for the civil war. In 1871 congress repealed Lincoln's income tax. The income tax as we know it today, began in the 20th century.

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We got ourselves a one-trick pony!

 

[NW-Bound]

... Here we have an EO that essentially does nothing but ask that the life expectancy tables be examined and possibly extended to better reflect longevity. One might think that people here would see that as a good thing, even those of you super duper smarter than everyone else who have been able to take money out early to manage the eventual RMD considerations. But instead....

[The other part of the EO, trying to encourage 401k plans for small businesses...I would think that in normal times most people here would also think that it is a good idea. ]

I don't think people say allowing people more flexibility in managing their retirement savings is a bad thing. Rather, the debate becomes whether taxes are needed at all, and that becomes contentious.

I am for more freedom: allowing people to access their retirement savings even earlier than 59-1/2 to accommodate ER's (and I do not mean the restrictive 72(t)). And if people want to delay and don't mind paying even more later, well, let them.

Two things sure in life and that is death and taxes.

It is generally preferable to delay death for as long as possible. Of course there are exceptions.

With taxes, it depends. Paying earlier may be better than later. It's harder to compute.

 

[travelover]

Sometimes I can't tell the difference between a crackpot and a troll.


In any case, time to bring out the pig.

 

[gayl]

I try to find the good in all but often I fail .... however in this thread I found how to block someone so that's good.

 

[samclem]

Thanks for the interesting discussion. If this EO results in proposed changes to RMDs, etc, we'll have more to discuss.