Have you taken your 2022 RMD re the possible passage of SECURE ACT 2.0?

[G-Man]

We are already at the 22% bracket with pensions and (85% taxable) social security, so my decision on Roth conversion is driven solely by the tax arbitrage of 22% now or 24%+ possibly in my 80s. It is not a big savings.

I will be in the same boat as you Gumby during my years of retirement. Two pensions and two social security benefits alone for my wife and I will put us in the 22% marginal tax bracket. Not counting the 401K distributions yet. So, I need to figure out how Roth conversions fits into our overall tax strategy and whether it's worst it.

 

[street]

I will be in the same boat as you Gumby during my years of retirement. Two pensions and two social security benefits alone for my wife and I will put us in the 22% marginal tax bracket. Not counting the 401K distributions yet. So, I'm to figure out how Roth conversions fits into our overall tax strategy and whether it's worst it.

I will be following comments on your question and I'm on the fence also.

 

[Midpack]

Wow, I didn’t even realize Secure 2.0 had been rolled into the spending bill. Won’t matter to us for 4-6 years, but may allow us a few more years of (reduced) Roth conversions. In 2028 none of this will matter anymore as our entries on annual returns will repeat for 20 years or so - all that can change is tax code treatment.

 

[street]

So, if a person in born in 1956 they will have to age 74 to take their first RMD. Is that right? 1956 would be the last year to able to take RMD at age 74 the way I see it.

 

[SecondCor521]

So, if a person in born in 1956 they will have to age 74 to take their first RMD. Is that right? 1956 would be the last year to able to take RMD at age 74 the way I see it.

The SECURE 2.0 Act existed in several slightly different versions.

The version that appears to be on the verge of passing never has a starting age of 74.

The text of the bill is a bit tricky to read, but to my eyes it looks like people born 1/2/1951 or later have a starting age of 73, and those born 1/2/1959 or later have a starting age of 75.

Those born on 1/1/1951 or 1/1/1959 may have to read the law carefully.

If you want to read the text of the bill yourself, search for "applicable age" at https://www.congress.gov/congressional-record/volume-168/issue-197/senate-section/article/S7328-1

 

[jebmke]

Passed in the House. On for signature.

 

[audreyh1]

So, if a person in born in 1956 they will have to age 74 to take their first RMD. Is that right? 1956 would be the last year to able to take RMD at age 74 the way I see it.

I think that’s right. DH just missed that and is stuck at 73 (still better than 72) and I would be able to wait until 75.

 

[audreyh1]

Passed in the House. On for signature.

Woo hoo!!! Party party party

 

[harllee]

DH was born 3/14/51. So under the new law he does not have to start RMDs until 2024?

 

[audreyh1]

The SECURE 2.0 Act existed in several slightly different versions.

The version that appears to be on the verge of passing never has a starting age of 74.

The text of the bill is a bit tricky to read, but to my eyes it looks like people born 1/2/1951 or later have a starting age of 73, and those born 1/2/1959 or later have a starting age of 75.

Those born on 1/1/1951 or 1/1/1959 may have to read the law carefully.

If you want to read the text of the bill yourself, search for "applicable age" at https://www.congress.gov/congressional-record/volume-168/issue-197/senate-section/article/S7328-1

FWIW

SEC. 107. INCREASE IN AGE FOR REQUIRED BEGINNING DATE FOR
MANDATORY DISTRIBUTIONS.

(a) In General.--Section 401(a)(9)(C)(i)(I) is amended by
striking ``age 72'' and inserting ``the applicable age''.
(b) Spouse Beneficiaries; Special Rule for Owners.--
Subparagraphs (B)(iv)(I) and (C)(ii)(I) of section 401(a)(9)
are each amended by striking ``age 72'' and inserting ``the
applicable age''.
(c) Applicable Age.--Section 401(a)(9)(C) is amended by
adding at the end the following new clause:
``(v) Applicable age.--

``(I) In the case of an individual who attains age 72 after
December 31, 2022, and age 73 before January 1, 2033, the
applicable age is 73.
``(II) In the case of an individual who attains age 74
after December 31, 2032, the applicable age is 75.''.

(d) Conforming Amendments.--The last sentence of section
408(b) is amended by striking ``age 72'' and inserting ``the
applicable age (determined under section 401(a)(9)(C)(v) for
the calendar year in which such taxable year begins)''.
(e) Effective Date.--The amendments made by this section
shall apply to distributions required to be made after
December 31, 2022, with respect to individuals who attain age
72 after such date.

 

[Car-Guy]

DH was born 3/14/51. So under the new law he does not have to start RMDs until 2024?

It will need to be passed/signed before we know what's in it.

But a few days ago the way I read it, if you were born in 1951, you would not have to take your first RMD's until you are 73. (or 2024) Basically he'll get another year from what it would be today or 72.

 

[audreyh1]

Does anyone know if the RMD tables will be readjusted, or will we use the existing tables and just start with an index of 75?

Tables remain the same. You would go to the line that matched your age when you start.

The tables were just updated last year, so they are not likely to change fr a long time.

 

[cathy63]

``(I) In the case of an individual who attains age 72 after
December 31, 2022, and age 73 before January 1, 2033, the
applicable age is 73.
``(II) In the case of an individual who attains age 74
after December 31, 2032, the applicable age is 75.''

Somebody help me with the math here. What is the applicable age for a person who was born on July 1, 1959?

This person will turn 73 on July 1, 2032, and 74 on July 1, 2033.

Per clause (i), since he turns 73 prior to Dec 31 2033, his applicable age is 73.
Per clause (ii), since he turns 74 after Dec 31, 2032, his applicable age is 75.

So which is it? Am I missing something obvious, or is there an error in this language?

 

[audreyh1]

Uh oh!

This language looks like there are only two tiers - 73 and 75 a decade later. And those born in 1959 stay at 73.

 

[harllee]

It will need to be passed/signed before we know what's in it.

But a few days ago the way I read it, if you were born in 1951, you would not have to take your first RMD's until you are 73. (or 2024) Basically he'll get another year from what it would be today or 72.

I think it has now passed both houses and is on the Presidents desk and he says he will sign it

 

[street]

Thanks for the clarification of years.

 

[SecondCor521]

Somebody help me with the math here. What is the applicable age for a person who was born on July 1, 1959?

This person will turn 73 on July 1, 2032, and 74 on July 1, 2033.

Per clause (i), since he turns 73 prior to Dec 31 2033, his applicable age is 73.
Per clause (ii), since he turns 74 after Dec 31, 2032, his applicable age is 75.

So which is it? Am I missing something obvious, or is there an error in this language?

I think the latter. I expect multiple people to find this mistake and there will be a technical correction at some point in the next decade or so.

Until then, we can call it the "1959 bug".

(My math in an earlier post was assuming that the language wouldn't contain such an error. Ha.)

 

[audreyh1]

I think the latter. I expect multiple people to find this mistake and there will be a technical correction at some point in the next decade or so.

Until then, we can call it the "1959 bug".

(My math in an earlier post was assuming that the language wouldn't contain such an error. Ha.)

Well they have less than a decade to fix it.

 

[Car-Guy]

I think it has now passed both houses and is on the Presidents desk and he says he will sign it

"It was as a political play on words".

 

[becca]

I was born in 1952. Good timing. I was able to take advantage of the spousal social security and defer mine till age 70 (phased out for those born after 1953) - now getting $3500 a month in SS, total near $5600 a month for both of us. My RMD was first moved from 70 1/2 to 72 and is now being moved to 73. Not complaining about being old.

 

[harllee]

I was born in 1952. Good timing. I was able to take advantage of the spousal social security and defer mine till age 70 (phased out for those born after 1953) - now getting $3500 a month in SS, total near $5600 a month for both of us. My RMD was first moved from 70 1/2 to 72 and is now being moved to 73. Not complaining about being old.

Same for me and my DH, both born in 1951, lucky us!

 

[djsander]

Somebody help me with the math here. What is the applicable age for a person who was born on July 1, 1959?

This person will turn 73 on July 1, 2032, and 74 on July 1, 2033.

Per clause (i), since he turns 73 prior to Dec 31 2033, his applicable age is 73.
Per clause (ii), since he turns 74 after Dec 31, 2032, his applicable age is 75.

So which is it? Am I missing something obvious, or is there an error in this language?

Go back and read clause i I believe it says for those that turn 73 prior to January 1st 2033.

 

[Midpack]

Somebody help me with the math here. What is the applicable age for a person who was born on July 1, 1959?

This person will turn 73 on July 1, 2032, and 74 on July 1, 2033.

Per clause (i), since he turns 73 prior to Jan 1 2033, his applicable age is 73.
Per clause (ii), since he turns 74 after Dec 31, 2032, his applicable age is 75.

So which is it? Am I missing something obvious, or is there an error in this language?

Go back and read clause i I believe it says for those that turn 73 prior to January 1st 2033.

Correct, but her question remains. I think it has to be a mistake?

 

[audreyh1]

Correct, but her question remains. I think it has to be a mistake?

Seems like it.

 

[CRLLS]

Math are hard for our Congress critters. They spent most of their schooling years running for student council instead of doing arithmetic.