EO to Raise RMD Age ?!

[MichaelB]

It's not feudalism; it's an anarcho-syndicalist commune.

One of my favorite films

 

[RobbieB]

We don't pay "extremely high taxes"

 

[Helena]

Yes! Those that need the money the least, that is, those who can afford to live a nice retirement without their deferred savings, will now get extra time before beginning to pay the taxes they chose to defer. Perhaps they will do some sort of "means testing" where those with the highest net worth get to wait the longest before beginning to pay the deferred taxes?

As I have posted repeatedly here, I have been taking out money from my traditional IRA for many years and will continue to do so [as I choose.]

The problem is not taking out money or paying the tax.

The problem is the RMD that FORCES you to take out an amount the government dictates every year... and every year that amount changes... and if the elderly person does not calculate correctly and does not take out the correct government mandated amount, the IRS will fine him 50% of the error. Amazing how many think that is a wonderful burden to force on old people.

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[braumeister]

As I have posted repeatedly here...

ad nauseam

The problem is the RMD that FORCES you to take out an amount the government dictates every year... and every year that amount changes.

exactly as promised when you set up the account, and spread out over your remaining lifetime.

 

[Helena]

ad nauseam

Obviously a waste of my time and effort.

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[redduck]

and if the elderly person does not calculate correctly and take out the correct government mandated amount, the IRS will fine him 50% of the error. Amazing how many think that is a wonderful burden to force on old people...
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Yes, I'm totally amazed by the vast majority of people who have posted on this thread who think this way.

 

[donheff]

Yes! Those that need the money the least, that is, those who can afford to live a nice retirement without their deferred savings, will now get extra time before beginning to pay the taxes they chose to defer. Perhaps they will do some sort of "means testing" where those with the highest net worth get to wait the longest before beginning to pay the deferred taxes?

Warren and Bill will be thrilled!

+1. Seems like a lot of angst around here over a tax deal that has already improved for most of us due to lower brackets under the recent tax cut. You took your deferments with known expectations. Now pay the tax. For those worrying about the kids getting whacked, how about pulling out more than your RMDs now at your lower brackets and put the excess in taxable where the kids can pick it up free and clear? If you are already so loaded that you are at the top brackets during RMD days, quit complaining - you just got a massive tax cut.

 

[travelover]

...........think about your money going to the billions spent on foreign aid in one year..

I really get tired of this old canard. Foreign aid is about 1% of the budget and most of that goes to allies for military assistance or buying off governments, especially in the Middle East.


U.S. foreign aid: A waste of money or a boost to world stability? Here are the facts

 

[Helena]

I really get tired of this old canard. Foreign aid is about 1% of the budget and most of that goes to allies for military assistance or buying off governments, especially in the Middle East.


U.S. foreign aid: A waste of money or a boost to world stability? Here are the facts

In other words, instead of the analogy of our RMD tax money going to fill potholes on roads we use... it's used to fill potholes on foreign roads we don't use.


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[ivinsfan]

I really get tired of this old canard. Foreign aid is about 1% of the budget and most of that goes to allies for military assistance or buying off governments, especially in the Middle East.


U.S. foreign aid: A waste of money or a boost to world stability? Here are the facts

It's still a lot of money, remember the old Richard Pryor movie where he worked in payroll and skimmed all the odd pennies from everyone's paycheck? He got a boatload of money every payday

 

[pb4uski]

If the RMD age were raised or eliminated, I would do what I have already been doing for many years... intelligently withdraw the amount of money I choose from my traditional IRA every year which is a tax advantage to me.

Under RMD rules, the government forces you to withdraw the amount the government chooses [and if you don't calculate and withdraw correctly, the IRS can fine you 50% of the error] which is a tax advantage to the government.

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Helena, thou doth protest too much. You knew the rules when you deferred the income. Stop whining now that you have to start paying taxes on what was deferred.

The second part is easy... just do the calculations correctly or have Vanguard or Fidelity help make sure that you do.... believe me, they don't want you to calculate it incorrectly and fine you, they would rather that you just do it right to begin with.

 

[pb4uski]

In other words, instead of the analogy of our RMD tax money going to fill potholes on roads we use... it's used to filling potholes on foreign roads we don't use.

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Yup... horrible situation... if I were you I would move.

 

[USGrant1962]

I read the EO as primarily directing Treasury to look at the life expectancy tables. So your 3.95% RMD might become 3.80%. Certainly nice, but it is not going to bust the Treasury nor avoid a whole lot of taxes. The EO does not directly address 59.5/70.5 issues, unless that is what "Distribution Period Tables" represent.

MichaelB and I both previously linked the White House summary, but here is the actual EO: https://www.whitehouse.gov/presiden...er-strengthening-retirement-security-america/. The relevant section is Section 2(d), a very small part of the overall EO.

 

[bw5972]

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Over time and depending on circumstance, government rules change.

Social Security was not taxed until the 1980s. If the government can implement a tax, it can also eliminate a tax.

RMD draconian rules need to change as many financial experts over the years have advocated... and apparently Trump agrees.

I'm not suggesting no taxes be paid on traditional IRA/401k withdrawals. I'm advocating the elimination of the RMD rule, or at least raising the RMD age at least a decade.

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I’d more likely support lowering the first RMD to your FRA.

 

[NW-Bound]

Yes! Those that need the money the least, that is, those who can afford to live a nice retirement without their deferred savings, will now get extra time before beginning to pay the taxes they chose to defer. Perhaps they will do some sort of "means testing" where those with the highest net worth get to wait the longest before beginning to pay the deferred taxes?

Warren and Bill will be thrilled!

I am afraid that what is more likely to happen is that they will say the people who rarely touch their deferred savings are so loaded that they do not really need SS.

OK, if you don't need it we ain't giving it. Or we should tax you more.

Or maybe they are not loaded, but they are used to spending so little, they would not know how to spend more. Take it from them!

But not me. I need all that money, and I have been withdrawing.

 

[NW-Bound]

... For those worrying about the kids getting whacked, how about pulling out more than your RMDs now at your lower brackets and put the excess in taxable where the kids can pick it up free and clear? ...

That's been my plan, as I have said. Heh heh heh...


PS. And that after-tax money, until I croak, its dividend and capital gain I can enjoy with no tax. What's not to like? Heh heh heh...

I have drained down my after-tax money quite a bit while waiting for 59-1/2. I would take out money from IRA/401k early, but they did not let me.

Talk about draconian tax, it's the penalty for drawing SS before 59-1/2. Another horrible thing is the rigid 72(t).

Come on, it's my money. Lemme spend it, and I will pay your tax.

 

[Helena]

Helena, thou doth protest too much.

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I actively protest injustice like the RMD... and not just on internet forums.

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[Helen]

Please note there are two of us with similar names, but our perspectives differ.

 

[pb4uski]

I actively protest injustice like the RMD... and not just on internet forums.

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Only problem is that the RMD is not injust, it's just that you now don't like the deal that you signed up for long ago.

 

[braumeister]

Only problem is that the RMD is not injust, it's just that you now don't like the deal that you signed up for long ago.

Makes me think of the classic American short story, The Devil and Daniel Webster.

 

[RobbieB]

Yup, the government hasn't changed the rules, they are holding their end of the bargain.

The deal was access at 59.5 and mandatory at 70.5, not "as little as Helena needs to pay zero tax forever"

 

[NW-Bound]

I did not know about this story, and will read it one day.

But in the end, Webster prevailed in reneging on a legal contract.

 

[EastWest Gal]

The retirement savings money has to be taxed sooner or later when it is spent. So, people want to keep it forever unspent? When they die, the money if not left to a younger spouse will be left to their heirs, mostly their offsprings. It will be then be taxed when distributed, and their offsprings may have a higher tax rate as they are younger and still working.

So, what is the advantage of delaying paying taxes?

Roth conversions for a longer period of time. You pay less tax by keeping in a lower tax brackets. The Roth IRA is a better inheritance vehicle. No tax at all on inherited Roth IRA, or any earnings within a Roth IRA.

OTOH, what about the deficit?

 

[Olbidness]

I was reading an article that made the case that because the Roth has no RMD's, tira's shouldn't either. Not sure that rationale makes any sense because the Govt. has already wet it's beak in the Roth. This is all just theory to me as this effects me 13 years in the future. I don't mind reasonable taxes all that much, just the cost of doing business I suppose.

 

[Helena]

Yup, the government hasn't changed the rules, they are holding their end of the bargain.

There are lots of injustices government causes... and hopefully corrects.... over time.

How about slavery? Ironically, that is akin to serfdom that I mentioned previously.

How about the tax on Social Security that was enacted decades after SS began?

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