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04-02-2019, 08:52 AM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 3,221
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RMD going to 72?
Not a huge change but a bipartisan bill going through the house and senate would raise the RMD age to 72.
https://finance.yahoo.com/news/bipar...125240433.html
Quote:
The bill would raise the age at which people are required to take distributions from their retirement plan to 72, up from 70.5 years. It would also allow long-term part-time workers to participate in 401(k) plans.
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04-02-2019, 09:03 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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I'd take it! Give us a couple more years to have lower taxes.
We'd be drawing SS anyway starting 70, so that will probably push us out of the 12% tax bracket already.
__________________
Retired since summer 1999.
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04-02-2019, 09:09 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,183
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Yeah, I'll be drawing SS by 70 as well, so I'm not sure this does much for me, but some might appreciate the flexibility. I'm hoping to fully convert my tIRA before RMDs, and at first I thought this would give me another 18 months, but with SS income I don't see the advantage for myself.
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04-02-2019, 09:19 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,996
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I'll take it. That would give us a couple more years of Roth Conversions at lower taxes. Every little bit helps.
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04-02-2019, 09:21 AM
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#5
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Thinks s/he gets paid by the post
Join Date: Sep 2013
Location: Cincinnati, OH
Posts: 4,344
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Quote:
Originally Posted by CRLLS
I'll take it. That would give us a couple more years of Roth Conversions at lower taxes. Every little bit helps.
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That's probably the biggest advantage if you have a large portion of pre-tax IRA funds.
__________________
The problem isn't artificial intelligence, it's natural stupidity.
You can't spend yourself to prosperity.
Semi-Retired 7/1/16: working part-time (60%) for now [4/24/17 changed to 80%]
Retired Aug 2, 2017; age 53
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04-02-2019, 09:43 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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I notice it doesn't say anything about any changes in the rate chart for how much you must withdraw annually by age.
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Retired since summer 1999.
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04-02-2019, 09:49 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Nov 2011
Posts: 3,865
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I'm holding out for age 72.25.
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04-02-2019, 09:57 AM
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#8
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,736
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Quote:
Originally Posted by audreyh1
I notice it doesn't say anything about any changes in the rate chart for how much you must withdraw annually by age.
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Is your thought that they’d chop off the first two ‘Distribution Periods’ and use the remainder of the age/rate chart?
__________________
You may be whatever you resolve to be.
100% x 10% > 10% x 100%
Small pensions & SS cover essentials
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04-02-2019, 09:59 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Posts: 2,518
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That would be great for us. This is the year of the tax torpedo for us. I turned 70 this past 12/1 and started collecting SS on my own record. And this year, my RMD's kick in for me too, which in addition to increasing our taxes, will mean that we are once again subject to IRMAA, after a multi year reprieve since I retired. But I think I'd only be able to defer the dreaded RMD for one year, as I turn 72 next 12/1.
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"Luck favors the prepared mind"
Pasteur
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04-02-2019, 10:00 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Jun 2016
Posts: 1,951
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If I were emperor, remove RMDs for the original account holder and spouse. Any non-spouse heirs would be required to RMD based on the heirs age when they inherit it.
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04-02-2019, 10:07 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,996
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Quote:
Originally Posted by Spock
If I were emperor, remove RMDs for the original account holder and spouse. Any non-spouse heirs would be required to RMD based on the heirs age when they inherit it.
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I'd vote for you.
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04-02-2019, 10:08 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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Quote:
Originally Posted by Huston55
Is your thought that they’d chop off the first two ‘Distribution Periods’ and use the remainder of the age/rate chart?
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That would be my assumption as I think it's based on mortality rates or whatever you call it.
However, I don't believe the chart has been updated with current statistics, in other words it is quite outdated in terms of US longevity.
__________________
Retired since summer 1999.
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04-02-2019, 10:11 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,736
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Quote:
Originally Posted by audreyh1
That would be my assumption as I think it's based on mortality rates or whatever you call it.
However, I don't believe the chart has been updated with current statistics, in other words it is quite outdated in terms of US longevity.
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That was my thought, that a new updated chart would be appropriate.
__________________
You may be whatever you resolve to be.
100% x 10% > 10% x 100%
Small pensions & SS cover essentials
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04-02-2019, 10:16 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
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That table has the same entry for age 70 (27.4) that I used back in 2015 or so when doing some projections involving RMDs.
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04-02-2019, 10:26 AM
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#15
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Thinks s/he gets paid by the post
Join Date: Aug 2014
Location: Chicago West Burbs
Posts: 2,996
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Quote:
Originally Posted by Huston55
Is your thought that they’d chop off the first two ‘Distribution Periods’ and use the remainder of the age/rate chart?
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That would be correct IMO. I don't think they are updating life expectancy. The actual text of the bill reads with respect to the RMD's, in part:
Quote:
ACTUARIAL ADJUSTMENT.—Section 401(a)(9)(C)(iii) of such Code is amended by striking ‘‘age 70 1⁄2’’ each place it appears and inserting ‘‘age 72’’.
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Unfortunately those who already have met age 70-1/2 do not get to reset the clock.
Quote:
(e) EFFECTIVE DATE.—The amendments made by this section shall apply to distributions required to be made after December 31, 2019, with respect to individuals who attain age 70 1⁄2 after such date.
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04-02-2019, 10:34 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,931
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Quote:
Originally Posted by steelyman
That table has the same entry for age 70 (27.4) that I used back in 2015 or so when doing some projections involving RMDs.
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I think it's at least 10 years old. Maybe way older. I have seen the same numbers for a loooooong time.
OK - it looks like the chart was last updated in 2002.
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Retired since summer 1999.
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04-02-2019, 10:42 AM
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#17
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Thinks s/he gets paid by the post
Join Date: Jul 2002
Posts: 1,581
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I sure hope it passes as it sounds custom tailored for me. I turn 70 late December this year. I sure would like two more years to do more conversions now that I've resigned all seasonal part time gigs.
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04-02-2019, 10:55 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2013
Location: Texas
Posts: 10,836
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That's good (not great) news. (If they don't up the RMD % at 72) Personally I rather see them eliminate RMD's altogether. Just pay the taxes when it's taken out by you or your heirs.
Or even better, just eliminate the tax altogether. (Which would have been a good April Fools joke if I were posting this yesterday.)
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04-02-2019, 11:15 AM
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#19
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Moderator Emeritus
Join Date: Jan 2007
Location: New Orleans
Posts: 47,467
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For me, it would not have made the slightest difference. I was withdrawing an amount equivalent to an RMD from my TSP when I was retired but only in my 60's. Thus I was leaning more heavily on the TSP and more lightly on taxable for my living expenses, than I otherwise might have done.
The objective was to lower my TSP balance at least a little bit to help deal with the upcoming "tax torpedo" when I turned 70 and started getting higher SS plus RMD's. It worked. Even so, the tax torpedo was awful enough! I can't imagine the tax hit I would have taken, had I not done this in advance.
Now that I am 70 (soon to be 71), if they change the RMD age, so what. I will just continue withdrawing as always.
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04-02-2019, 11:52 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,807
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RMD going to 72?
I think what I’m doing is similar to W2R’s approach. Taking withdrawals now although the IRS-mandated withdrawal is still a way off. The denominator I use is derived from their table but adjusted forward and lowered by 1 each year, which means a gradual raise in portfolio percentage withdrawn. It’s an individual decision.
The result is a very small fraction (compared to 4%). I don’t expect much from SS and don’t think I’ll have a big tax torpedo. Changes in age don’t affect the approach much if at all unless they radically change the actuarial life expectancies.
[ADDED] I wonder what effect this has on QCD (qualified charitable distributions). It would seem to delay their use.
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