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

[audreyh1]

It was, in this thread discussing Secure Act 2.0 passage in 2022. https://www.early-retirement.org/fo...of-secure-act-2-0-a-116132-2.html#post2869431

 

[FREE866]

It was, in this thread discussing Secure Act 2.0 passage in 2022. https://www.early-retirement.org/fo...of-secure-act-2-0-a-116132-2.html#post2869431

ahh ok...thx.....looks like today the final details were published....

 

[street]

I hope they get it done!! Great news and thanks for that update. I have been trying to keep tabs with that bill.

 

[Car-Guy]

Secure 2.0 Act begins on page 2046. RMD age changes are on page 2085.

Yes, that does help....

So it says on page 2085
(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.

So "if" I'm reading this right, for those of us that turn 72 next year (2023) we get one more year before RMD's kick in. (From what it is today)

 

[MarieIG]

From the article:



Makes me wonder who this change is really helping. If 80% need more than the RMD, they are probably already taking it out to spend, so they won't delay.

Those who don't need it, like many here, may already be withdrawing to make Roth conversions, so I guess we benefit by being able to make more conversions to let it grow tax free.

Ultimately, though, the tax man will get his rightful share, maybe just a little later.

I don't see much benefit, since anything over 70 is in tandem with the Social Security income.

 

[grasshopper]

I turn 72 in 2023, so it looks like another large Roth conversion, instead of a RMD.

 

[Ronstar]

Hope so - it will be good to get a few more Roth conversions in.

 

[Gumby]

Threads merged.

 

[Exchme]

I don't see much benefit, since anything over 70 is in tandem with the Social Security income.

This is what I get from trying to model this too. We happen to be in a range where each Roth Conversion $ after age 70 increases the taxation of SS, so the real marginal bracket for Roth Conversions is too high to interesting.

Overall, after accounting for heirs' taxes on inheriting our IRAs, the benefit I estimate for us if this passes is less than $1 per $10000 of our estate. That's probably why it's popular with politicians - it sounds good but is meaningless.

Thanks, Congress!

 

[audreyh1]

Well I hope it passes. I’d just as soon put it off until age 75.

I don’t worry about heirs’ taxes on what’s left in the IRA.

 

[MarieIG]

This is what I get from trying to model this too. We happen to be in a range where each Roth Conversion $ after age 70 increases the taxation of SS, so the real marginal bracket for Roth Conversions is too high to interesting.

Overall, after accounting for heirs' taxes on inheriting our IRAs, the benefit I estimate for us if this passes is less than $1 per $10000 of our estate. That's probably why it's popular with politicians - it sounds good but is meaningless.

Thanks, Congress!

It's not changing my plan to front load conversions.

Over 4,000 pages - there's a lot more in there than just tweaking conversions and retirement contributions.

 

[audreyh1]

Yes, it’s a budget bill.

 

[CardsFan]

This is what I get from trying to model this too. We happen to be in a range where each Roth Conversion $ after age 70 increases the taxation of SS, so the real marginal bracket for Roth Conversions is too high to interesting.

Overall, after accounting for heirs' taxes on inheriting our IRAs, the benefit I estimate for us if this passes is less than $1 per $10000 of our estate. That's probably why it's popular with politicians - it sounds good but is meaningless.

Thanks, Congress!

I took SS at FRA, but I am still doing conversions up to the IRMAA cliff. Even counting SS being 85% taxable, the conversion has an effective tax rate of 23%. So, it is a 1% penalty based on current tax rates, but this is where I will be anyway in 6 years at 73, and I don't expect the tax rates to stay where they are.

But, this will (hopefully) reduce future RMD's down to about the amount I am converting and give us more years before we will hit the IRMAA cliff, if we live long enough.

Is there a BIG benefit? Nah.

 

[MarieIG]

Here's a video by Rob Berger regarding some changes as would apply to retirement planning.

 

[camfused]

Assuming this will pass, I just changed my model to do a few more years of Roth conversions. It will make a +$250K difference for me (I always access model changes at age 90).

 

[Gumby]

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.

 

[MSDalt]

Trump's Tax Cuts Sunset in 2026

Review the tax brackets which preceded the TCJA (noting that inflation will have boosted those thresholds).
Government spending is out of control and neither party seems to care.
Consider that the INTEREST RATE for the growing national debt has roughly tripled.
Tax rates will probably never be this low again.
We are converting heavily, with the market being depressed.

 

[CRLLS]

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.

We too are in the 22% bracket. We have done Roth conversions the last 3 years. This year after doing a What-if scenario in last year's TurboTax, the conversion amount that we considered is makes a 27% difference. I'm not sure how that happens but it is clear that, as a tax arbitrage, this year we will not convert. Maybe next year will be different.

 

[Gumby]

The spending bill with the Secure Act 2.0 in it passed the Senate a couple hours ago. It is being sent over the the House for action before tomorrow midnight. As far as I can tell, there were no changes to RMD language.

 

[audreyh1]

The spending bill with the Secure Act 2.0 in it passed the Senate a couple hours ago. It is being sent over the the House for action before tomorrow midnight. As far as I can tell, there were no changes to RMD language.

Awesome!

 

[Car-Guy]

The spending bill with the Secure Act 2.0 in it passed the Senate a couple hours ago. It is being sent over the the House for action before tomorrow midnight. As far as I can tell, there were no changes to RMD language.

 

[street]

The spending bill with the Secure Act 2.0 in it passed the Senate a couple hours ago. It is being sent over the the House for action before tomorrow midnight. As far as I can tell, there were no changes to RMD language.

Thanks for the that update. I hope it gets done!

 

[audreyh1]

+1

 

[camfused]

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?

 

[SecondCor521]

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?

The (nearly passed) law only changes the starting age. There is no mention in the relevant section of the RMD tables themselves.

Note that age 75 doesn't become the starting age until 2033 or so. If I did the math close to correctly, that will only affect people born on or after 1/2/1959.

I think, but am not certain, that the RMD tables themselves are managed by the IRS and are regulations and not in the law itself. They may change between now and 2033, but not as a direct result of this current law.