RMD going to 72?

[FIREchief]

Oh, hyperbole!


They are changing the rules so that they can bail out everyone who never saved a dime? That's hyperbole too, right?


Have these changed passed? And these are the changes that will prevent you from giving your children the basis of a good retirement?


So these are the ones you mean when you said "haven't saved a dime"?

Yes!! I think you now understand!

 

[Helena]

What really needs to be part of that bill is to make SSA tax thresholds indexed for inflation. It was set at $33k (individual) in 1984 and has not changed since.

$33k in 1984 is not the same as $33k in 2019.

If it was indexed, your income threshold that triggers SSA taxes would go up every year. Just like COLA, inflation, and standard deductions. Thus, your SSA benefits would not be so likely to get hit with taxes.

That's a reasonable change and one our elected officials should be working on.

There is another bill "Social Security 2100" that addresses that injustice... but that bill may never get out of committee.

HR 860

" SEC. 104. Increase in threshold amounts and rate for inclusion of Social Security benefits in income.

(a) In general.—Subsection (a) of section 86 of the Internal Revenue Code of 1986 is amended to read as follows:

“(a) In general.—Gross income for the taxable year of any taxpayer described in subsection (b) (notwithstanding section 207 of the Social Security Act) includes Social Security benefits in an amount equal to the lesser of—

“(1) 85 percent of the Social Security benefits received during the taxable year, or

“(2) one-half of the excess described in subsection (b)(1).”.

(b) Base amount.—Subsection (c) of section 86 of such Code is amended to read as follows:

(c) Base amount.—For purposes of this section, the term ‘base amount’ means—

“(1) except as otherwise provided in this paragraph, $50,000,

“(2) $100,000 in the case of a joint return,and

“(3) zero in the case of a taxpayer who—

“(A) is married as of the close of the taxable year (within the meaning of section 7703) but does not file a joint return for such year, and

“(B) does not live apart from his spouse at all times during the taxable year.”.


HR 860

https://www.congress.gov/bill/116th-congress/house-bill/860

SR 269

https://www.congress.gov/bill/116th-congress/senate-bill/269


However the author of the House bill did give a recent press release.

https://larson.house.gov/media-cent...estifies-budget-committee-retirement-security

.

 

[Helena]

Now would be nice but 2023 .... No value to me.

I too get shut out of that benefit in the Senate version. That's why I have contacted my senators. Ironically one of my senators has the same birth year as I do, so he is shut out of that benefit too in the Senate version. Not so ironically, Senator Portman author of the Senate version and that arbitrary 2023 date... squeaks in by a year to get that benefit. How convenient is that !!

.

 

[Spock]

Well it passed the house.

https://www.cnbc.com/2019/05/23/bip...lears-house-moves-closer-to-becoming-law.html

Both bills also rely on funding their provisions by changing the rules governing inherited retirement accounts. The House measure would require most nonspouse beneficiaries to withdraw the money within 10 years of the original owner’s death, while the Senate bill would require distribution within five years for accounts worth at least $400,000, unless the beneficiary is the spouse.

 

[steelyman]

Thanks for the update on the Secure Act. It looks like the Senate version is called RESA (Retirement Enhancement Savings Act).

 

[Helena]

.

House bill 1994 increasing the RMD age from 70 to 72 overwhelmingly passed the House today.

https://401kspecialistmag.com/secure-act-sails-through-house/

Now it goes on to the Senate.

But remember, the Senate version of the bill would delay that benefit to year 2023, thereby denying three years of seniors that benefit they would receive under the House bill.

I too get shut out of that benefit in the Senate version. That's why I have contacted my senators. Ironically one of my senators has the same birth year as I do, so he is shut out of that benefit too in the Senate version. Not so ironically, Senator Portman [born 1955] author of the Senate version and that arbitrary 2023 date, squeaks by to get that benefit. How convenient is that !!

.

 

[foxfirev5]

.
I too get shut out of that benefit in the Senate version. That's why I have contacted my senators. Ironically one of my senators has the same birth year as I do, so he is shut out of that benefit too in the Senate version. Not so ironically, Senator Portman author of the Senate version and that arbitrary 2023 date... squeaks in by a year to get that benefit. How convenient is that !!

.

Convenient?! I knew it! Those dang Buckeyes always have been a crooked bunch!

 

[FIREchief]

Well it passed the house.

https://www.cnbc.com/2019/05/23/bip...lears-house-moves-closer-to-becoming-law.html

Some lawmakers and Washington watchers have referred to this legislative effort as a first step in addressing the lack of retirement savings among the nation’s workers.

I thought the first step was introducing tIRAs and 401k plans years ago - which included the stretch as an incentive to increase retirement savings - which worked!! Until just now....

 

[joeea]

Well it passed the house.

https://www.cnbc.com/2019/05/23/bip...lears-house-moves-closer-to-becoming-law.html

Yup, only two hurdles remain. The Senate might pass it or something similar. If recent experience holds, the Senate won't attempt to pass anything they aren't completely convinced that the president will sign.

But who knows what will happen with the president? Apparently, he doesn't intend to cooperate with Congress as long as he is being investigated. Maybe he'll change his mind, or all the investigations will suddenly end. It's hard to tell.

Personally, I doubt this bill gets passed into law. I've been wrong before.

 

[jebmke]

Yup, only two hurdles remain. The Senate might pass it or something similar. If recent experience holds, the Senate won't attempt to pass anything they aren't completely convinced that the president will sign.

But who knows what will happen with the president? Apparently, he doesn't intend to cooperate with Congress as long as he is being investigated. Maybe he'll change his mind, or all the investigations will suddenly end. It's hard to tell.

Personally, I doubt this bill gets passed into law. I've been wrong before.

I agree; slim chance of passage. Too much in play and if it isn't done soon, we get to election year and nothing happens in an election year.

 

[Helena]

Convenient?! I knew it! Those dang Buckeyes always have been a crooked bunch!

I misposted... actually, he squeaks in by two years.

WHY would the Senate intentionally delay that benefit three years alienating millions of seniors right before an election year ??

Hopefully they won't and that 2023 date will be changed to match the House bill's date 12-31-2019.

.

 

[chemist]

Two points:

It is the RBD not the RMD which is being pushed back, the Required Beginning Date is when you must take RMD's.

Second is that what they give with one hand they take away with the other. The bill eliminates the stretch IRA for our heirs.

 

[Helena]

Yup, only two hurdles remain. The Senate might pass it or something similar. If recent experience holds, the Senate won't attempt to pass anything they aren't completely convinced that the president will sign.

But who knows what will happen with the president? Apparently, he doesn't intend to cooperate with Congress as long as he is being investigated. Maybe he'll change his mind, or all the investigations will suddenly end. It's hard to tell.

Personally, I doubt this bill gets passed into law. I've been wrong before.

It was President Trump who first issued an Executive Order to look into raising the RMD age.

I've been waiting and watching ever since !

 

[Helena]

Two points:

It is the RBD not the RMD which is being pushed back, the Required Beginning Date is when you must take RMD's.

Second is that what they give with one hand they take away with the other. The bill eliminates the stretch IRA for our heirs.

I think everyone here knows it's the age when RMDs must be first taken that is the subject of this topic.

I understand about the heir situation. Hopefully I will be leaving my heirs much of my IRA money too. But the main priority should be those who are now seniors who need to delay their RMD as far as possible to avoid their own overtaxed situation !!


.

 

[googily]

WSJ says the Senate will be voting on the House version.

https://www.wsj.com/articles/house-...-changes-to-u-s-retirement-system-11558625474

The House bill, known as the Setting Every Community Up for Retirement Enhancement, or Secure Act, passed with a vote of 417-3. A Senate GOP aide said the plan is for the Senate to vote on the House’s Secure Act, rather than its own version, and Sen. Rob Portman (R., Ohio), a Finance Committee member who is active on retirement policy, said the Senate should swiftly pass the House bill.

 

[MichaelB]

Here’s the House summary of the bill https://waysandmeans.house.gov/site...s/documents/SECURE Act section by section.pdf

 

[steelyman]

WSJ says the Senate will be voting on the House version.

Hmmm. If they pass it without changes (in particular an exemption for inherited IRAs below a certain value), there goes almost 20 years (after the 10 year period) of tax-deferred growth for me and a corresponding increase in taxable income (during the 10 year period) due to accelerated withdrawals. [emoji20]

 

[RunningBum]

I see the requirement for a non-spouse heir to take RMDs within 10 years a much bigger negative than any positive of me holding of on RMDs for 18 months. I assume that 10 year requirement applies to Roths as well, right? I'm more likely to drain my Roth in my lifetime now than cash in appreciated funds in my taxable account that will get stepped up basis.

 

[Helena]

WSJ says the Senate will be voting on the House version.

https://www.wsj.com/articles/house-...-changes-to-u-s-retirement-system-11558625474

The House bill, known as the Setting Every Community Up for Retirement Enhancement, or Secure Act, passed with a vote of 417-3. A Senate GOP aide said the plan is for the Senate to vote on the House’s Secure Act, rather than its own version, and Sen. Rob Portman (R., Ohio), a Finance Committee member who is active on retirement policy, said the Senate should swiftly pass the House bill.

Thanks for posting. There are some extra good benefits in the Senate bill. It would be nice if they took the best benefits of both. Just so they get rid of that crazy 2023 year !

.

 

[FIREchief]

Hmmm. If they pass it without changes (in particular an exemption for inherited IRAs below a certain value), there goes almost 20 years (after the 10 year period) of tax-deferred growth for me and a corresponding increase in taxable income (during the 10 year period) due to accelerated withdrawals. [emoji20]

I don't expect that bolded part to be true. If the ten year limit mirrors the current 5 year option/requirement (e.g. for non-individuals), then I would expect that you could delay on any withdrawals until year ten.

 

[steelyman]

The way I read the summary, if the original IRA owner died over 10 years ago, the account would have to be withdrawn completely unless inherited by those exempted.

I guess the details won’t be known until something passes (and may still be murky).

 

[FIREchief]

The way I read the summary, if the original IRA owner died over 10 years ago, the account would have to be withdrawn completely unless inherited by those exempted.

I guess the details won’t be known until something passes (and may still be murky).

I think we're reading it the same way. If the 10 year window applies to any beneficiary (including older individuals and non-individuals such as charities or estates) then this could be a plus in that it could greatly simplify some forms of estate planning for qualified assets. Non-individuals currently have to withdraw all assets within 5 years. A ten year window would be twice as good!

 

[FIREchief]

I've been reading the text of both current code and the proposed bill. It appears that, if enacted, we'll now have three flavors of distributions:
a) inheritance by a non-individual (remains as it is now, all assets have to be removed within five years)
b) inheritance by a designated beneficiary (must be an individual, all assets must be removed within ten years)
c) inherited by an eligible designated beneficiary (spouse, minor child, disabled, etc. - can be stretched per current law)

 

[MrLoco]

I see the requirement for a non-spouse heir to take RMDs within 10 years a much bigger negative than any positive of me holding of on RMDs for 18 months. I assume that 10 year requirement applies to Roths as well, right? I'm more likely to drain my Roth in my lifetime now than cash in appreciated funds in my taxable account that will get stepped up basis.

I believe that the potential elimination of the stretch IRA for heirs is only the beginning. Next Congress will look to eliminate or at least limit the stepped up basis scenario for appreciated assets in taxable accounts passed on to heirs.


Probably start out with an exemption of $250,000 for appreciated assets. Anything above the exemption does not get the step up in basis.


Next they will mandate RMD's for Roth IRA's as well for the owner.


Next they will accelerate the tables for RMD's for heirs so the money gets drained sooner.


With a national debt above $20 Trillion it will only get worse for those of us who have saved diligently over the years so Congress can give it away to those who did not.


Sucks.

 

[joeea]

I misposted... actually, he squeaks in by two years.

So you are saying your senator didn't intentionally try to screw you while conveniently advantaging himself?

Go figure!