It’s made more progress in this thread than in the US Senate. Stuck there.
RMD going to 72?
- Thread starter zinger1457
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It’s made more progress in this thread than in the US Senate. Stuck there.
Winemaker
Thinks s/he gets paid by the post
I hope it stays stuck; as it is just a money grab by politicians.
There are some of you that have said that retirement accounts were meant to be a source of funds for the retiree and their spouse, and shouldn't get special tax treatment and be inherited.
Well, the same goes for my house, or rental properties. They were not meant to be shelter for my children, but they will receive special tax treatment when inherited, and are not forced to be liquidated 10 years after our death.
They're my personal property.
There are some of you that have said that retirement accounts were meant to be a source of funds for the retiree and their spouse, and shouldn't get special tax treatment and be inherited.
Well, the same goes for my house, or rental properties. They were not meant to be shelter for my children, but they will receive special tax treatment when inherited, and are not forced to be liquidated 10 years after our death.
They're my personal property.
marko
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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Just a guess but I'd bet most folks here will leave this earth with well over that amount in an IRA. More likely 2 to 5 times that amount.
Agree with you 100%.
Surprised how many posters disagree. At least they should "grandfather"
older IRAs. Changing the rules in the middle of the game. Shame on them!
All because they cannot manage the national debt/budget.
pb4uski
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But your house or rental properties are not the accumulated result of income that you never pay taxes on and saved for retirement.... your house and rental properties were paid for from income that you paid taxes on.... a huge difference... you totally missed the point.
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pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
+1 Mine will likely be much more than $400k even after RMDs.
What they will probably do is NOT index the $400k to inflation so as time goes on the benefit of the $400k exemption will get smaller and smaller.
The deferred taxes in your IRA are our property.
target2019
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That really cut me bad. Thanks for the reminder that deferred taxes belong to the taxing authorities among us.
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Agree with you 100%.
Surprised how many posters disagree. At least they should "grandfather"
older IRAs. Changing the rules in the middle of the game. Shame on them!
All because they cannot manage the national debt/budget.
I agree. They appear to actually maneuvering to create a tax bomb for the next generation after encouraging the parents to use this as a tool to assist their children with their own retirements.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I don't think that IRA participants were ever encouraged to use IRAs as a tool to assist their children with their own retirements. Show me the .gov citations that encouraged that.
You are welcome.
Winemaker
Thinks s/he gets paid by the post
I'm not missing any point. The appreciation of my house and rental properties will will get a stepped up basis on the day of my death, and no income taxes will be paid at all. Yes, there may be an estate tax if the value is large enough, but no income tax.
If your argument is that my mortgage payments were taxed as income, and therefore it makes the real estate gains "tax legit", does pass the smell test. Most of my rental income is sheltered by real and imaginary accounting expenses, and no income taxes were ever on paid on that income, even though real money goes into my bank account.
Perhaps you could say that my home is different as I cannot depreciate it on my tax return. My $600,000 home that I paid $150,000 has a large gain now, and income taxes will never be paid on that appreciation.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, you are still missing the point. That tIRA money was the accumulation of income that was never taxed and at some point needs to be taxed. Your house and properties are NOT the accumulation of income that was never taxed so they are treated differently.
I'm not going to defend stepped-up basis... it is what it is but probably doesn't make a lot of sense theoretically unless one pays estate tax... but the powers that be gave those with estates under the exemption a nice tax break.
JustCurious
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Winemaker
Thinks s/he gets paid by the post
I never said it shouldn't be taxed ever, just taxed as the rules they set up when they were created. My kids, if forced to liquidate over 10 years, are thrown into much higher tax brackets than if liquidated under current rules. It's a money grab.
Our ~$250,000 of untaxed contributions created multimillion dollar 401k, 403b and tIRAs, under the laws created by Congress back in the 1980's. No funny founder's stock tricks, just good old investing 101 for us. I was a supervisor in a coal mine for 35 years. 80% of it is capital gains, taxed differently if held outside a tIRA. But If we allow them to change the rules now, and we don't protest, scream, bang our feet peaceably, they will come after more. And more. And more.
I also believe the "allowance" for the purchase of annuities in the bill, allows for the "confiscation" of the remainder of account, and prevents all inheritance possibilities.
My view, IRA's introduced 30+ years ago, with detailed rules. I followed the rules. Today, IRA net worth, substantial. Being forced to liquidate in 5 or 10 years, (depending on house/senate version), extremely unfair.
Just glad, I'm not alone in my views,
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I agree that the 5 or 10 years is an overreaction by Congress to close a loophole that allows wealthy people who to superstretch their IRAs under the current rules by making grandchildren or even great grandchildren beneficiaries of their IRAs. I would prefer something along the lines of the IRA owner's remaining life per the IRS tables or 20 years, whichever is longer, for non-spousal beneficiaries.
Are you aware that the Senate version allows a stretch on the first $400k?
Are you aware that the Senate version allows a stretch on the first $400k?
I don't have proof, but I'd bet some financial advisors & brokerages did so in their ads for creating IRA's. Perhaps even companies did while encouraging 401k participation. I mean if you allowed to pass along IRA's to beneficiaries with extended time distribution, why wouldn't they tout that? And the Fed Gov isn't off the hook for providing encouragement when their own rules allowed it. How are they not?
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I had no need to read any further.
You picqued my curiosity though... so I googled "Why contribute to an IRA?" and got a number of links... none mention being able to stretch tax-deferral to non-spousal beneficiaries as a selling point so I'm skeptical of your assertion.
https://www.fidelity.com/viewpoints/retirement/why-contribute-to-ira-now
https://www.moneyunder30.com/why-you-should-make-an-ira-contribution
https://investor.vanguard.com/ira/iras
https://www.fool.com/retirement/2018/09/14/what-is-an-ira-and-should-you-contribute-to-one.aspx
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Nature Lover
Recycles dryer sheets
My view, IRA's introduced 30+ years ago, with detailed rules. I followed the rules. Today, IRA net worth, substantial. Being forced to liquidate in 5 or 10 years, (depending on house/senate version), extremely unfair.
Just glad, I'm not alone in my views,
My feelings, too. Unfair and frustrating. Govt may not have marketed the stretch aspects, but there was a huge marketing effort by those offering the IRA's and advising about retirement/estate planning (and Govt representatives were certainly aware of it).
Despite my feelings, if the legislation passes and the game changes, we'll do what we always do: suck it up, adjust our planning and how we manage our affairs to do the best we can do, before the goal posts are moved again.
BTW, the feds aren't the only ones who move the goal posts. In CA, there's a proposal pending to add a State Estate Tax!
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I guess that is my point... the government had to have some mechanism to eventually tax IRA money if the IRA owner didn't live long... they passed on spouses, which makes sense... and provided for non-spouse beneficiaries to take it over their lives which worked fine for the owner's or spouse's kids, neices or nephews.
Then some clever people came along and pushed the idea of superstretching by making grandchildren or even great-grandchildren beneficiaries and they are now saying... enough is enough and reining it in.... but they are overreacting.
I don't ever recall a "huge" marketing effort to focus on estate planning... my recollection is that they pitches were centered around potential tax savings benefits to the owner and spouse... and those are unchanged. While I don't recall any mention of future generations, if there was it was an aside and not a primary selling point.
CRLLS
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Whether the fed "marketed" this aspect of tIRA's or not is irrelevant. The same goes for the "retirement planners". It was written in the law. I learned all about IRAs before I chose to participate. The details of the plan, whether one of them applies to their personal situation or not, should not be changed to those already in the plan IMO. It certainly applies to someone.
Nature Lover
Recycles dryer sheets
PB4, Understood...and agree on most of what you said. I do however remember planners/advisors discussing the tax savings/planning benefits of designating grandchildren and great-grandchildren as beneficiaries if parents thought they might ultimately have more than enough. Basically, if you didn't need it all, both the funds and the tax benefits could be passed on to future generations. (So, primarily for your retirement, but use this tool because if you end up not needing all of it, you can bequest the benefits to your kids/grandkids/...)
For those who knew/expected they'd have enough even without an IRA, the tax deferral to future generations, was in fact, one of several primary selling points to choosing an IRA over other planning tools for some (effective, simpler and easy to modify, if necessary). (So primarily to defer taxes today, and other than RMDs, let the IRA funds grow tax deferred long-term, for your kids/grandkids/... who may very likely be taxed at lower rates.)
Not contradicting your experience/recollection, only stating mine.
For those who knew/expected they'd have enough even without an IRA, the tax deferral to future generations, was in fact, one of several primary selling points to choosing an IRA over other planning tools for some (effective, simpler and easy to modify, if necessary). (So primarily to defer taxes today, and other than RMDs, let the IRA funds grow tax deferred long-term, for your kids/grandkids/... who may very likely be taxed at lower rates.)
Not contradicting your experience/recollection, only stating mine.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Fair enough... and if something sounds to good to be true....
I actually like the idea of reigning in the stretch, but I think 20 years would be more sensible. I recognize that some people who were planning on it might be disrupted, but IMO it will be a very small percentage. I guess it is easier for me to accept thinking the superstretch was something that never should have existed to begin with.
I think I would keep the current inherited IRA distribution rules for children, neices and nephews of the owner and go 20 years with all others.
I actually like the idea of reigning in the stretch, but I think 20 years would be more sensible. I recognize that some people who were planning on it might be disrupted, but IMO it will be a very small percentage. I guess it is easier for me to accept thinking the superstretch was something that never should have existed to begin with.
I think I would keep the current inherited IRA distribution rules for children, neices and nephews of the owner and go 20 years with all others.
