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Old 05-21-2019, 09:16 PM   #161
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Don't care either. No big deal.
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Old 05-22-2019, 05:18 AM   #162
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Originally Posted by FIREchief View Post
How dare we try to give our children the basis of a good retirement when Washington needs the money to bail out somebody who never saved a dime.
How does changing the point in time after which your taxes are no longer deferred give your children the basis of a good retirement?

Obviously it has nothing to do with bailing out somebody who never saved a dime.
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Old 05-22-2019, 05:55 AM   #163
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How does changing the point in time after which your taxes are no longer deferred give your children the basis of a good retirement?
Let's say I have $2 Million in a 401k and I kick today under the current tax laws. My child (say age 18 to make this discussion easier) inherits the 401k and can take RMD's over their expected lifetime. The 401k is likely to grow faster than their RMD's (at least for a good number of years). Under the out in five proposal, their RMD would need to be $400K plus a year, so their tax rate is much higher and at 18 not such a good idea.

The point is that I may have been accumulating funds in the 401K because of the stretch provision, and taking that away has a major negative impact in planning for my children's future retirement.
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Old 05-22-2019, 10:29 AM   #164
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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.
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Old 05-22-2019, 10:56 AM   #165
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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.

My understanding is the current threshold limits were set in the 90's under Clinton, for single 50% at $25K and 85% at $34K. Wouldn't hold my breath waiting the threshold limits to increase, with the hole SS is in or approaching there's probably a better chance they will decrease.
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Old 05-22-2019, 12:59 PM   #166
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The point is that I may have been accumulating funds in the 401K because of the stretch provision, and taking that away has a major negative impact in planning for my children's future retirement.
That's your point?

Yup. Changing the rules means we have to change our plans sometimes.

So if the rules actually change, you'll have to find a different way to give your children the basis of a good retirement. Or your children will have to give themselves the basis of a good retirement themselves.

I'm still not seeing how this has anything to do with bailing out somebody who never saved a dime.
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Old 05-22-2019, 01:08 PM   #167
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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.
That's a very reasonable idea. IMHO, many more things should be indexed to inflation.

Of course that would result in less net taxes than today, so more would have to come from someplace else to offset the loss.
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Old 05-22-2019, 01:25 PM   #168
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Why have any limit or deadline? They would be better off when the owner Karks it, as tax will need to be paid on the whole amount when inherited by anyone other than a spouse. At least that is what happened to us with my mother in law.
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Old 05-22-2019, 03:15 PM   #169
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Why have any limit or deadline? They would be better off when the owner Karks it, as tax will need to be paid on the whole amount when inherited by anyone other than a spouse.
Well, for one thing, it's because that was one of the carrots Washington used decades ago to convince a lot of us to save aggressively for our own retirements. The message was, "don't worry about over saving as we'll let you pass on residual benefits to your heirs." That carrot is now starting to discolor.

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At least that is what happened to us with my mother in law.
Are you referring to qualified retirement plan assets?
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Old 05-22-2019, 03:22 PM   #170
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I'm still not seeing how this has anything to do with bailing out somebody who never saved a dime.
That was hyperbole. The point was that they are changing the rules and paying for it by removing a financial benefit from aggressive savers that has always been part of the "game." It would be different if it only applied to future contributions to tax-deferred investments. Tax deferral has been the incentive and now, after several decades, they're planning to take back a significant chunk of that.

The revenue generated will be redistributed to others who haven't saved enough and need to work longer, save more going forward, etc.
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Old 05-22-2019, 03:27 PM   #171
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Are you referring to qualified retirement plan assets?
Yes, the tax was deducted prior to distribution to the heirs (sons and daughters).
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Old 05-22-2019, 04:21 PM   #172
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Yes, the tax was deducted prior to distribution to the heirs (sons and daughters).
Thanks. Sounds like that was a choice and not a requirement of the tax laws.
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Old 05-22-2019, 05:39 PM   #173
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Maybe, it was DW's family that managed it.
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Old 05-22-2019, 07:08 PM   #174
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That was hyperbole.
Oh, hyperbole!

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The point was that they are changing the rules and paying for it by removing a financial benefit from aggressive savers that has always been part of the "game."
They are changing the rules so that they can bail out everyone who never saved a dime? That's hyperbole too, right?

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It would be different if it only applied to future contributions to tax-deferred investments. Tax deferral has been the incentive and now, after several decades, they're planning to take back a significant chunk of that.
Have these changed passed? And these are the changes that will prevent you from giving your children the basis of a good retirement?

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The revenue generated will be redistributed to others who haven't saved enough and need to work longer, save more going forward, etc.
So these are the ones you mean when you said "haven't saved a dime"?
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Old 05-22-2019, 07:56 PM   #175
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Yes, the tax was deducted prior to distribution to the heirs (sons and daughters).
This doesn't make a lot of sense, unless some critical information is missing here. One of the benefits of a tIRA or 401K is that when there are named beneficiaries, that that remainder can be taken out over the life of the beneficiary.
https://www.investopedia.com/terms/s/stretch-ira.asp

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Non-spousal heirs of any age, regardless of the type of IRA, must take RMDs based on their life expectancy (rules for inherited IRAs are different for spouses and non-spouses). The younger the beneficiary, the lower the RMD, which allows more funds to remain in the IRA to stretch the IRA over time. This is why many stretch IRAs are passed to the youngest member of a family.
A mistake that can be made is to name the estate as the IRA beneficiary: https://www.irahelp.com/slottreport/...ra-beneficiary
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Under IRS rules, your estate is not considered a “designated beneficiary” which means it has no life expectancy and can’t take advantage of the “stretch IRA” concept. So, if you die before your required beginning date (April 1 of the year after you turn age 70 ½), the IRA will have to pay out all funds to the estate within five years. If you die after your required beginning date, your IRA will have to make distributions to the estate over your remaining single life expectancy. What this all means for the beneficiaries who eventually get your IRA funds through your estate is that they’ll have to take the funds sooner, and thus likely pay more taxes than if you had named than as the direct beneficiary of your IRA.
So perhaps the IRA owner made a (big) boo-boo?
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Old 05-22-2019, 08:08 PM   #176
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Originally Posted by joeea View Post
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!
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Old 05-22-2019, 10:31 PM   #177
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Originally Posted by tn3sport View Post


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-...house-bill/860

SR 269

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


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

https://larson.house.gov/media-cente...ement-security

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Old 05-22-2019, 11:08 PM   #178
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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 !!

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Old 05-23-2019, 10:49 AM   #179
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Well it passed the house.

https://www.cnbc.com/2019/05/23/bipa...oming-law.html


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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.
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Old 05-23-2019, 10:58 AM   #180
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Thanks for the update on the Secure Act. It looks like the Senate version is called RESA (Retirement Enhancement Savings Act).
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