Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Old 06-19-2019, 02:50 PM   #541
Thinks s/he gets paid by the post
 
Join Date: Mar 2013
Location: Coronado
Posts: 3,674
Quote:
Originally Posted by JustCurious View Post
... Let's say you have to be with an employer for 20 years to get a pension, what happens if you get fired in year 18? You get nothing...
Actually ERISA (Federal law) requires that a private pension's vesting period can be no longer than 5 years. So if you get fired in year 18, then you still get to claim that pension when you reach retirement age.
cathy63 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 06-19-2019, 03:15 PM   #542
Full time employment: Posting here.
googily's Avatar
 
Join Date: Jul 2013
Posts: 792
Quote:
Originally Posted by copyright1997reloaded View Post
Even better were those companies that provided BOTH.
{waves} I am a lucky beneficiary of this, though our company froze the pension to new entrants in 2009 and froze the benefits completely in 2012. They added a cash balance plan to replace the pension going forward, and also added a second defined contribution plan to replace the 401k match, which they had dropped to 1% (but which this year came back up to 3%).

It's going to be a lot of separate payments when the time comes!
googily is offline   Reply With Quote
Old 06-19-2019, 05:23 PM   #543
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by pb4uski View Post
It is possible. Your mistake seems to be thinking that the great-grandchild is inheriting an inherited IRA from their grandparents or parents... that is not the case... the great-grandchild is the beneficiary of an IRA owned by a great-grandparent who is intentionally skipping a couple generations. The skipped generations are perhaps wealthy in their own right or are inheriting other assets like taxable accounts and getting a stepped up basis or even other IRA accounts.
Yes, you are correct. I misunderstood your post. I initially thought that you were suggesting that RMDs would be recalculated (i.e. stretched further) upon death of a grandchild, who passed along an inherited IRA to a great-grandchild. Somebody misunderstood this earlier in the thread, so I guess that was what confused me.

Quote:
Yes, some wealthy people whose spouse or children do not need the money or are inheriting other assets are designating grandchildren or great-grandchildren as tIRA beneficiaries. If my 89 yo mother designated her 2 yo great-grandchild as a beneficiary it would stretch that IRA... the RMD factor is 80 years for a 2 yo compared to 25 years for her 60 yo grandmother... so it stretches it an additonal 55 years!!
While this certainly could happen, I doubt it is happening frequently enough to make any difference in Washington's revenue picture. Besides, wouldn't your 89 yo mother be concerned about dumping 16 years worth of compounded growth into the lap of that 2 yo on his/her 18th Birthday? OTOH, it might work....
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-19-2019, 05:37 PM   #544
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
Quote:
Originally Posted by FIREchief View Post
....Besides, wouldn't your 89 yo mother be concerned about dumping 16 years worth of compounded growth into the lap of that 2 yo on his/her 18th Birthday? OTOH, it might work....
Can you elaborate? how would she be dumping 16 years worth of componunded growth? As I understand it the 2 yo wuld still need to take RMDs at ~1/80th, 1/79th, 1/78th...etc.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 06-19-2019, 06:14 PM   #545
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by SecondCor521 View Post
On the strategy front, I think I remember reading that the $400K is per original owner, not per beneficiary. But if it is per beneficiary and there are more grandkids around who can each shelter $400K and if the children don't need the money, then I think my idea might have merit.
Are you referring to the Senate version? (i.e. the $400K)
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-19-2019, 06:15 PM   #546
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by pb4uski View Post
Can you elaborate? how would she be dumping 16 years worth of componunded growth? As I understand it the 2 yo wuld still need to take RMDs at ~1/80th, 1/79th, 1/78th...etc.
Exactly. Which would leave a WHOLE LOTTA compounded growth on top of the original/remaining principle.
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-19-2019, 06:19 PM   #547
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 7,866
Quote:
Originally Posted by FIREchief View Post
Are you referring to the Senate version? (i.e. the $400K)
I don't know!

I know there are different versions of the bill floating out there with different parameters, and one of them has something in it about $400K.

In general, I'm going to watch and wait and see what happens. I have a tickler in the fall to follow up and figure out how to respond strategically to whatever gets implemented (if anything).

Until then I'm just musing and brainstorming.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 06-19-2019, 06:22 PM   #548
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by cathy63 View Post
Actually ERISA (Federal law) requires that a private pension's vesting period can be no longer than 5 years. So if you get fired in year 18, then you still get to claim that pension when you reach retirement age.
It's the way that payments are calculated. If I start for MegaCorp at age 22 and get canned at 40, I'm likely not eligible to start receiving that pension until I'm 65. 25 years of inflation (even at today's rates) will devastate the purchasing power of a pension based upon things like final five years salary, actual salaries during participation, etc.
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-19-2019, 06:26 PM   #549
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by SecondCor521 View Post
Suppose Grandpa dies and leaves his $1M traditional IRA to his 50 year old son. Grandpa and the son both live in a state where partial disclaimers are legal. 50DS partially disclaims half of the traditional IRA, which according to federal and state law, results in the disclaimed half going to 50DS's son, who is 25.
I believe that if a primary beneficiary disclaims his/her rights to inherit, the assets would then pass to any named contingent beneficiaries. If none are named, and primary disclaims, then the assets likely pass to the estate (which is an awful way to pass along qualified retirement assets to individual heirs - under either current or future law).
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-19-2019, 06:31 PM   #550
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by SecondCor521 View Post
I don't know!

I know there are different versions of the bill floating out there with different parameters, and one of them has something in it about $400K.
The Senate's version has a five year sunset (instead of the ten years in the House's SECURE act), but also excludes the first $400K. I've looked for more details/interpretations but come up empty. The consensus thinking appears to be that the $400K limit would apply to the initial total amount of qualified assets, not to each beneficiary. If this were true, it would argue for Roth converting at least $400K to maximize the benefits of that remaining stretch. That said, I think the five year limit in the Senate version is a deal killer. It goes too far in requiring, for example, a $3.4M tIRA to generate taxes at the beneficiary(s) ordinary income tax rate for $3M over five years.
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
RMD going to 72?
Old 06-22-2019, 10:34 AM   #551
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
steelyman's Avatar
 
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
RMD going to 72?

This may be a repeat from earlier in this thread but it’s an update on SECURE act progress (or lack) from CNBC:

[ADDED] The quote below has a biased slant to it (I think) but the linked article is a bit more balanced.

Quote:
The Secure Act was approved by the House on May 23 by 417-3. Proponents were said to be hoping to push it through the Senate using a process called unanimous consent.

That means that the Senate would vote on the House version without making changes.

That hasn't happened partly due to opposition from Senator Ted Cruz, R-Texas. Proposals he supports to expand the use of 529s to pay for home schooling and therapy for disabilities, among other expenses, were dropped from the House legislation.

Other expansions of the 529 college savings program, including the ability to pay for student loans and apprenticeships, remained.

"The retirement bill that unanimously passed in the House Ways and Means Committee included the expanded 529 savings plan package," a spokesman for Cruz said. "Unfortunately, at the behest of special interest groups, Speaker Pelosi removed the 529 expansion from the bill before sending it to the Senate."

"Senator Cruz believes we should add it back in and pass a retirement bill that includes both the Gold Star tax fix and the 529 expansion," the spokesman said. The Gold Star fix would prevent children and spouses of fallen service members from getting hit with unexpectedly high tax bills following recent tax reform changes.
https://www.cnbc.com/2019/06/21/why-...he-senate.html
__________________

steelyman is offline   Reply With Quote
Old 06-22-2019, 01:16 PM   #552
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
Quote:
Originally Posted by FIREchief View Post
The Senate's version has a five year sunset (instead of the ten years in the House's SECURE act), but also excludes the first $400K. I've looked for more details/interpretations but come up empty. The consensus thinking appears to be that the $400K limit would apply to the initial total amount of qualified assets, not to each beneficiary. If this were true, it would argue for Roth converting at least $400K to maximize the benefits of that remaining stretch. That said, I think the five year limit in the Senate version is a deal killer. It goes too far in requiring, for example, a $3.4M tIRA to generate taxes at the beneficiary(s) ordinary income tax rate for $3M over five years.
I agree that 5 years is onerous. However, your example is a poor example because only 0.11% of IRAs have $3 million or more and only 1.5% are over $1 million.

I can't find anything on the Senate version either... the offical line is only that it was received in the Senate.

https://www.bankrate.com/finance/tax...problem-1.aspx
Attached Images
File Type: png Capture.PNG (39.4 KB, 39 views)
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 06-22-2019, 02:15 PM   #553
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by pb4uski View Post
I agree that 5 years is onerous. However, your example is a poor example because only 0.11% of IRAs have $3 million or more and only 1.5% are over $1 million.

I can't find anything on the Senate version either... the offical line is only that it was received in the Senate.

https://www.bankrate.com/finance/tax...problem-1.aspx
It wasn't meant to be a "representative" example of the typical inheritance. It was intended to illustrate an un(?!)intended consequence of the Senate version. That said, it sounds like the "revenue generation" for the benefits for the masses would come largely on the backs of the one (point.five) percenters. Nothing new here.....
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-22-2019, 02:25 PM   #554
Recycles dryer sheets
FIREchief's Avatar
 
Join Date: Aug 2016
Posts: 177
Quote:
Originally Posted by pb4uski View Post
That's an interesting article. With respect to pre-tax IRA's (i.e. not Roth), it seems that even under current law the Treasury becomes a big winner. They're borrowing money at 2%, while the tax deferred earnings in the tIRA balloon over the years/decades at higher rates. Doesn't the treasury benefit from the stretch just as much as the owner when the funds are ultimately withdrawn?
__________________
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
FIREchief is offline   Reply With Quote
Old 06-22-2019, 02:26 PM   #555
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Location: Upstate
Posts: 2,948
Quote:
Originally Posted by FIREchief View Post
It wasn't meant to be a "representative" example of the typical inheritance. It was intended to illustrate an un(?!)intended consequence of the Senate version. That said, it sounds like the "revenue generation" for the benefits for the masses would come largely on the backs of the one (point.five) percenters. Nothing new here.....
And that attitude is reflected here, i.e. screw the one (point.five) percenters.
copyright1997reloaded is offline   Reply With Quote
Old 06-22-2019, 02:43 PM   #556
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
Quote:
Originally Posted by FIREchief View Post
It wasn't meant to be a "representative" example of the typical inheritance. It was intended to illustrate an un(?!)intended consequence of the Senate version. That said, it sounds like the "revenue generation" for the benefits for the masses would come largely on the backs of the one (point.five) percenters. Nothing new here.....
Those jumbo $3+ million IRAs must be a lot of growth... even the current max of $19k for 40 years is only $760k.

ETA: Found more info... if you take the max contribution since 1986 and 10 years of catchup contributions the contribution total is only ~$520k.

Quote:
Originally Posted by FIREchief View Post
That's an interesting article. With respect to pre-tax IRA's (i.e. not Roth), it seems that even under current law the Treasury becomes a big winner. They're borrowing money at 2%, while the tax deferred earnings in the tIRA balloon over the years/decades at higher rates. Doesn't the treasury benefit from the stretch just as much as the owner when the funds are ultimately withdrawn?
I think in the long run you are right, but Congress doesn't necessarily think long run.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 06-22-2019, 02:57 PM   #557
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,653
Quote:
Originally Posted by pb4uski View Post
Those jumbo $3+ million IRAs must be a lot of growth... even the current max of $19k for 40 years is only $760k.

ETA: Found more info... if you take the max contribution since 1986 and 10 years of catchup contributions the contribution total is only ~$520k.



I think in the long run you are right, but Congress doesn't necessarily think long run.
I think pension plan rollovers might be part of the difference. I haven't studied all the details but my wife only worked for about 10 years and her pension + profit sharing contributions were a lot higher than $19K per year. It all rolled over to an IRA eventually.



I had the opportunity to lump sum my DB pension (chose not to) but that would have gone into my IRA had I done so.
jebmke is offline   Reply With Quote
Old 06-22-2019, 02:59 PM   #558
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,877
Quote:
Originally Posted by FIREchief View Post
That's an interesting article. With respect to pre-tax IRA's (i.e. not Roth), it seems that even under current law the Treasury becomes a big winner. They're borrowing money at 2%, while the tax deferred earnings in the tIRA balloon over the years/decades at higher rates. Doesn't the treasury benefit from the stretch just as much as the owner when the funds are ultimately withdrawn?
Most people investment savvy enough to put nonpublic shares of a company into an IRA know to make sure to convert it to Roth before that company goes public. As a result most of the monster-sized IRAs are Roth, and so the US Treasury does not benefit from the growth.
GrayHare is offline   Reply With Quote
Old 06-22-2019, 03:02 PM   #559
Thinks s/he gets paid by the post
Cut-Throat's Avatar
 
Join Date: Jan 2007
Location: Minneapolis
Posts: 1,172
Quote:
Originally Posted by pb4uski View Post
Those jumbo $3+ million IRAs must be a lot of growth... even the current max of $19k for 40 years is only $760k.

ETA: Found more info... if you take the max contribution since 1986 and 10 years of catchup contributions the contribution total is only ~$520k.

Here is how to 'Game' the System.
Cut-Throat is offline   Reply With Quote
Old 06-22-2019, 03:05 PM   #560
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,586
Quote:
Originally Posted by Cut-Throat View Post
A snippet or description of the link is a courtesy to members, knowing what it’s about let’s them make a more informed choice.
MichaelB is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
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
Going back to college at 65, and going Greek as well SumDay Life after FIRE 6 03-16-2013 08:04 PM
Going, Going, Gone? CitizenK Hi, I am... 24 04-10-2012 04:00 PM
Wamu ~ going, going.... VaCollector Active Investing, Market Strategies & Alternative Assets 8 09-25-2008 10:36 PM
IRA RMD Stuff TromboneAl FIRE and Money 12 02-15-2006 06:08 AM
Did you miss the RMD last year? mickeyd Life after FIRE 4 01-14-2005 09:07 AM

» Quick Links

 
All times are GMT -6. The time now is 04:07 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.