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Re: inherited 401ks
Old 08-25-2006, 01:11 PM   #21
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Re: inherited 401ks

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Originally Posted by youbet
On the general subject of inheritance taxes......... I've always believed that laws, rules, regulations, etc., are judged for fairness by their equity across groups. For example, the marriage tax is hated by dual career married couples because couples "living together," don't have to pay it. In the case of the inheritance tax, I think the problem is that the folks with the big bux seem able to avoid it. Only those worth a million, or two, or four, etc., seem to get hit. I'd like to see the rules adjusted so that all of the famous Kennedy clan would be regular ole middle class folks next generation unless they make every dollar they have themselves. No benefit from intergenerational wealth whatsoever. Of course, that will never happen. The ultra-rich will continue to essentially escape the inheritance tax regardless of how it is changed.
Hello again youbet:

Oh, boy! Hi-jacking DW's thread. I hope I'm making something good for supper!

I disagree somewhat with your inheritance tax ideal. I want those children of hard working business owners to have an opportunity to continue with the business or farm, working inside the environment that their parents helped create and had not created purely for self-interest. Many ways are currently possible, not just using the tax code. Some passing of money on is a partial solution in a complex world. As I see things, our Constitution has always worked toward pushing things toward the middle. Checks and balances temper extremes--for the most part. We have grown great as a country because we always push things back toward the middle-- away from excess--or the market does it for us: We try to assist some who are at the lower end, who may need a helping hand; we have pulled some near the top of the income pyramid back from excess. This is important to continue, so we don't end up as a country of crack addicts and Paris Hiltons, poor extremes and rich extremes. The tax code is just one tool that helps achieve this. Again, I like things that balance and moderate extremes. At least that's how I see things.
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Re: inherited 401ks
Old 08-25-2006, 01:39 PM   #22
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Re: inherited 401ks

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Originally Posted by Nords
After all our efforts to LBYM and ER, are you suggesting that we shouldn't use our hard-earned financial-management skills to keep our wealth for ourselves?

If the Kennedys have their assets hanging out there pushing the envelope to the latest bleeding edge of tax evasion avoidance scheming planning, then I'm happy to see their lawyers spread the knowledge to be used for my benefit!* Because if it wasn't for pit bull aggressive legal tactics, then we wouldn't be seeing these legislative changes to IRA conversions and inheritances.
Good point Nords.* And I'll agree so long as the laws and rules are not so onerous that only the super wealthy can afford to run the legal minefield to take advantage of them.* In today's world, I think the Kennedys and their kind are able to utilize tax avoidance schemes strategies more frequently than middle class canon fodder like you or I.*
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Re: inherited 401ks
Old 08-25-2006, 01:48 PM   #23
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Re: inherited 401ks

Quote:
Originally Posted by Apocalypse
Hello again youbet:

Oh, boy!* Hi-jacking DW's thread.* I hope I'm making something good for supper!*

I want those children of hard working business owners to have an opportunity to continue with the business or farm, working inside the environment that their parents helped create and had not created purely for self-interest.** that helps achieve this..........I like things that balance and moderate extremes.* At least that's how I see things.*
Can't argue with that Greg!

Maybe I'm just paranoid, but I worry that changes to the inheritance tax structure and other wealth-passing laws/rules/regulations will result in the ultra-wealthy being able to pass wealth unemcumbered and small business owners, professionals and, heck, even working class slobs who accumulated a large financial portfolio by LBYM and smart investing will get screwed.

You better be making something good for supper............!* *
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Re: inherited 401ks
Old 08-25-2006, 02:56 PM   #24
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Re: inherited 401ks

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Originally Posted by youbet
FinanceDude....

A word of caution.....* *that type of independent thinking is sometimes frowned upon on this board.* 100% party loyalty seems to be more mainstream.*

If you care.......!* *
I will keep that in mind...........and with two Republicans and three Democrats in my immediate family, it's not like MY VOTE has mattered anyway since I started voting in 1980......................
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Re: inherited 401ks
Old 08-25-2006, 04:15 PM   #25
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Re: inherited 401ks

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Originally Posted by retire@40
Unfair, but necessary.* The strength of this country is in maintaining a robust and reasonably happy middle class.

Without the estate tax, we would be a country of have-lots and have-nones.

I'd like to see the estate tax threshhold at the $5 million and above level right now.
Way wrong on this one... the estate tax is not a wealth redistribution tax... it goes into the large bucket of the gvmt... and it is SO small it is a drop... and the cost of getting that small drop is a hugh percentage of the tax..

The normal income tax is the one that creates wealth redistribution with the various earned income credit etc that is given to the low wages.. none of that helps out the middle class...

And why does the vast majority of people who will never pay this tax want it repealed? Because THEY think it is unfair and/or hope one day they have that wealth and do not want it taxed...

I earned it and paid tax on it, I saved it instead of spending it... and now you want to tax it again because I die... geee what a great country...
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Re: inherited 401ks
Old 08-25-2006, 04:21 PM   #26
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Re: inherited 401ks

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Originally Posted by youbet
Now there is an understatement!* ** Thanks for the reference.* I'll dig into it right after I get tonight's dinner into the marinade. DW is substitute teaching today and I don't want her to be disappointed when she returns from the salt mine.

On the general subject of inheritance taxes.........* I've always believed that laws, rules, regulations, etc., are judged for fairness by their equity across groups.* For example, the marriage tax is hated by dual career married couples because couples "living together," don't have to pay it.* In the case of the inheritance tax, I think the problem is that the folks with the big bux seem able to avoid it.* Only those worth a million, or two, or four, etc., seem to get hit.* I'd like to see the rules adjusted so that all of the famous Kennedy clan would be regular ole middle class folks next generation unless they make every dollar they have themselves.* No benefit from intergenerational wealth whatsoever. Of course, that will never happen. The ultra-rich will continue to essentially escape the inheritance tax regardless of how it is changed.* *

*

So, if I keep all my money until I die, the govmt should get it... but if I GIVE it away before I die... well, that is just great estate planning

GIVE ME A BREAK... I earned it for ME and MY FAMILY.. not for YOU and YOUR FAMILY (meaning everybody else.. not just you...)... go earn your own money, keep your grubby hands out of my pockets..
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Re: inherited 401ks
Old 08-25-2006, 04:33 PM   #27
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Re: inherited 401ks

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Originally Posted by retire@40
There is no "marriage penalty tax."
Really? Are you married??
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Re: inherited 401ks
Old 08-25-2006, 06:27 PM   #28
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Re: inherited 401ks

Quote:
Originally Posted by Texas Proud
Way wrong on this one... the estate tax is not a wealth redistribution tax... it goes into the large bucket of the gvmt... and it is SO small it is a drop... and the cost of getting that small drop is a hugh percentage of the tax..

The normal income tax is the one that creates wealth redistribution with the various earned income credit etc that is given to the low wages.. none of that helps out the middle class...

And why does the vast majority of people who will never pay this tax want it repealed?* Because THEY think it is unfair and/or hope one day they have that wealth and do not want it taxed...

I earned it and paid tax on it, I saved it instead of spending it... and now you want to tax it again because I die...* geee what a great country...
Many support repeal of the estate tax because they do not know that there is a huge exemption. When they get more facts, their opinions often change. Especially when they learn that only a very small percentage of estates pay the tax. Warren Buffet among many other very wealthy people do not support repeal. Bill Gates father even led a petition drive among the wealthy against repeal of the tax.

The billions of dollars in government revenue lost will have to be made up by increasing taxes on those less able to pay or by cutting government programs. In addition repeal would harm charities, who recieve gifts from the rich to reduce the size of their estate.

For those of you that support repeal, I assume you also support repeal of the step up in basis rules.


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Re: inherited 401ks
Old 08-25-2006, 07:37 PM   #29
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Re: inherited 401ks

OP:

Quote:
Originally Posted by Martha
It used to be that only spouses could rollover an inherited 401k into their own IRA.
Followed by:

Quote:
Originally Posted by FinanceDude
Doubt it would have happened with a Democratic majority in Congress..........................
This has to at least tie the record for a change in topic!

Haven't looked at the details but my impression is that they are just making the laws for inherited 401ks consistent with those for inherited IRAs?

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Re: inherited 401ks
Old 08-25-2006, 09:11 PM   #30
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Re: inherited 401ks

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Originally Posted by FinanceDude
Really?* Are you married??* *
Yes. That's what I'm thinking too!
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Re: inherited 401ks
Old 08-25-2006, 11:43 PM   #31
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Re: inherited 401ks

I inherited an IRA from my father 5 years ago. I was executor of the estate so I had to dig through Publication 590 to figure out how it worked. IIRC, at least in 2001, if the deceased had not yet reached 70-1/2, then the IRA could be inherited and withdrawals were treated like the heir's IRA...i.e. withdrawals need not begin until the heir reached 70-1/2. If the deceased was over 70-1/2 and had begun required distributions (my father was 71-1/2) then the IRA had to be rolled into an IRA-BDA (Beneficiary Distribution Account) and the heirs had to continue making at least the minimum required withdrawals for their (+spouse) ages. So my siblings and I (in our 40's) have been taking mandatory Inherited IRA distributions for the past 5 years that started at about 2.5%, and we must continue increasing the size of the distributions up through age 82 when the RMD is 100%. As in a traditional IRA (as if we were older than 59-1/2) we could choose to take a larger distribution any time we want to pay taxes on it.
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Re: inherited 401ks
Old 08-26-2006, 12:10 AM   #32
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Re: inherited 401ks

Quote:
Originally Posted by Martha
Many support repeal of the estate tax because they do not know that there is a huge exemption. When they get more facts, their opinions often change. Especially when they learn that only a very small percentage of estates pay the tax. Warren Buffet among many other very wealthy people do not support repeal. Bill Gates father even led a petition drive among the wealthy against repeal of the tax.

The billions of dollars in government revenue lost will have to be made up by increasing taxes on those less able to pay or by cutting government programs. In addition repeal would harm charities, who recieve gifts from the rich to reduce the size of their estate.

For those of you that support repeal, I assume you also support repeal of the step up in basis rules.
Some quick responses... On your first one.. so what?? Warren Buffet is more liberal... and he could do anything he wants with his money.. but instead of paying a tax, he uses the loophole that you mention.. give it to charity... but why should there be this hugh government incentive to give to charity?? If you think about it, this is money from the government to the charity of YOUR choice...

And on that theme.. I do not think it would harm charities that much.. everybody thought that making charities tell how much something was worth and that is what you can deduct from your tax return did not affect giving that much (from what I had read)... I think changing the estate law will not so much either.. Buffett had said all along that he was giving away his money..

I have NO problem repealing the step up in basis... but then you get into is the capital gain tax on not real gain fair either... if you look at England, they do not have a capital gain tax at all... not having a tax on capital means people will move capital around into its 'best' use.. if you have a tax waiting if you sell, then you do not move because of a tax instead of because it is the best place for capital at that time...

I have no problem in paying some more tax... but I want the govmt to stop spending money like drunken sailors... the prescripton drugs is a perfect example... we are now 'obligated' for paying trillions of dollars over the next few decades with NO funding source.. how smart is that??

Sorry.. I was not short...
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Re: inherited 401ks
Old 08-26-2006, 09:30 AM   #33
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Re: inherited 401ks

Texas, I guess we will just have to disagree.
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Re: inherited 401ks
Old 08-26-2006, 10:43 AM   #34
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Re: inherited 401ks

Quote:
Originally Posted by Texas Proud
* if you look at England, they do not have a capital gain tax at all...*
Sorry, but where did you get this notion from?* The UK has a Capital Gains Tax very similar to the one here in the US.* There is an annual exemption of 8,800 pounds sterling (tax year 06-07) and after that CGT is the same rate as income tax, between 10% and 40% depending on income.* There is, however, an indexation allowance for assets owned over long periods to ameliorate the effects of the huge inflation that was experienced in the British economy in the 70' and 80's.* Also personal residences are not taxed as long as various criteria are met (similar to US) but also that the house and land may not be more than one and a quarter acres.*

I just couldn't let this pass.*

Source:* HM Revenue and Customs website (don't know how to attach a link* *)
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Re: inherited 401ks
Old 08-27-2006, 02:41 AM   #35
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Re: inherited 401ks

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Originally Posted by jj
Sorry, but where did you get this notion from? The UK has a Capital Gains Tax very similar to the one here in the US. There is an annual exemption of 8,800 pounds sterling (tax year 06-07) and after that CGT is the same rate as income tax, between 10% and 40% depending on income. There is, however, an indexation allowance for assets owned over long periods to ameliorate the effects of the huge inflation that was experienced in the British economy in the 70' and 80's. Also personal residences are not taxed as long as various criteria are met (similar to US) but also that the house and land may not be more than one and a quarter acres.

I just couldn't let this pass.

Source: HM Revenue and Customs website (don't know how to attach a link )
No problem... I was wrong... but, it was what I was told when I worked over there for a bit more than a year.. but since nobody I know would have made 8,800 quid in gains (which is what, about $15K??) ... and then from what you write they are indexed so you do not need a step up for an estate!!!

But then again.. I just got a letter from HM revenue and customs looking for me... maybe they want some more money!!
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Re: inherited 401ks
Old 08-27-2006, 02:43 AM   #36
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Re: inherited 401ks

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Originally Posted by Martha
Texas, I guess we will just have to disagree.
YES. but that is the beauty of this country



Now, if they would implement MY thinking... we would be better off

(OK, just had to throw that one in... sorry Martha)
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Re: inherited 401ks
Old 08-29-2006, 11:36 AM   #37
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Re: inherited 401ks

Constitutional Amendment

Before any tax increase in enacted into law, all Representatives and Senators, and their spouses and dependents, must liquidate and pay 95% of their total net worth prior to the tax increase going into effect.
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