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

[cyber888]

DH is 1951 so hope this legislation gets signed. Otherwise, we will need to take something in 2023.

 

[Ian S]

Born in 1951 so another year before RMDs hit. So we will do more Roth conversions. For us, it's not just the looming expiry of the tax cuts but since DH is 16 years my junior, he is apt to have many future years in the single tax brackets. I suppose he could remarry but I won't be around to worry about that!

 

[camfused]

DW born in 58 and me in 59, so I interpret that as we do RMDs for her at 73 and for me at 75. Oye, gotta update my model again.

 

[G-Man]

DW born in 58 and me in 59, so I interpret that as we do RMDs for her at 73 and for me at 75. Oye, gotta update my model again.

Both at 75 I think.

 

[JoeWras]

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

Seems like it.

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

The internet agrees this appears to be a mistake. Apparently earlier sections of the bill had more defined phase-in brackets and some of that language may have accidentally stayed.

Congress always cleans up stuff and in the meantime the IRS can enforce as intended. If you look at the text of the bill, you'll see it has many technical and clerical amendments that clean up other previous mistakes.

 

[DawgMan]

So, I have not read all 6 pages here, but while I like having the additional 3 years before RMDs (75 now for me), wondering why the our government doesn't want their taxes sooner? Are we on our way to RMDs going away and it falling on our kids once the get our $$? Anyways, short of using the additional years for Roth conversions, does it change any real tax efficiency planning?

 

[Midpack]

The issue, as Levine sees it, is that a person born in 1959 will both turn 73 before 2033 (i.e., in 2032) and turn 74 after 2032 (i.e., in 2033). “But I only see this one as a mistake in drafting. With [the RMD age issue] being a decade out, it’s really not important. It could be fixed 1,000 times before it applies.” Any drafting mistake not caught before the bill’s passage would need to be fixed later by a technical amendments bill.

https://www.thinkadvisor.com/2022/12/22/why-secure-2-0-act-needs-a-fix-jeff-levine/

It appears when they cut out the age 74 provision, they didn’t pay attention combining the remaining 73 & 75 rules. With 10 years to fix it, I’m not worried - doesn’t apply to me anyway.

 

[Car-Guy]

So, wondering why the our government doesn't want their taxes sooner? Are we on our way to RMDs going away and it falling on our kids once the get our $$?

"I think" we should remember that a lot of folks will be withdrawing from their tax deferred accounts "well before" RMD's are required regardless of what the RMD age is for lots of reasons (so it gets taxed then)... And I think they got this stuck in the new Secure 2.0 package so it would be easier to pass... I wonder if it would have passed as a stand alone bill? There's probably a lot of things in that bill we won't like too.

 

[Graybeard]

Congress Passes Major Boost to Retirement Savings
December 23, 2022 Michael Townsend
Among other provisions, the SECURE Act 2.0 will raise the age at which individuals must begin taking required minimum distributions (RMDs) from their retirement account to 73, beginning in January 2023.

In its final act of 2022, Congress approved a massive year-end spending bill that includes a set of bipartisan enhancements to retirement savings.

The retirement package, known as SECURE Act 2.0, was included in the 4,155-page bill that will fund every federal agency and government program through September 30, 2023. The bill was cleared by the House on December 23, one day after the Senate voted for it.

The SECURE Act 2.0 legislation that was incorporated into the larger bill is the result of negotiations between House and Senate members in recent months to combine three different retirement-focused bills that enjoyed bipartisan support across both chambers. It builds on the SECURE Act, which was approved by Congress in 2019.

The most notable provision in the new bill increases the age at which individuals must begin taking required minimum distributions (RMDs) from their retirement account to 73 from 72, beginning January 1, 2023. In 2033, the RMD age will increase again, to 75.

https://www.schwab.com/learn/story/congress-passes-major-boost-to-retirement-savings

 

[copyright1997reloaded]

A very long twitter thread covering various details, along with Simpson gifs to entertain:

https://twitter.com/x/status/1605609788183924738

I will simply say that congress has made even more of a mess of this.

However, I will be investigating the 529 to Roth aspects of the changes.

ETA: 529->Roth
Section 126 (page 2161)
transfer to Roth IRA of 529 plan beneficiary
Account must be 15 years old or more
transfer up to IRA limit per year, reduced by actual IRA contributions
Lifetime max of 35k (this is a bummer)
can't transfer any contributions or earnings made in the last 5 years
No Roth IRA income limits
Starts in 2024?

I hope to leverage this to use some of my child's (so far) unused 529 plan as a vehicle to fund a ROTH IRA (in place of me gifting $ to be used, thus allowing me to gift $ for a non-Roth account.

ETA: Nothing in the law seems to prevent establishing a 529 with yourself as the beneficiary, fund it for 15 years and then xfer to Roth?

 

[FREE866]

A very long twitter thread covering various details, along with Simpson gifs to entertain:

https://twitter.com/x/status/1605609788183924738

I will simply say that congress has made even more of a mess of this.

However, I will be investigating the 529 to Roth aspects of the changes.

I find the the fact that someone took the time to break all that down with all those Simpson gifs amazing!

 

[audreyh1]

A little disappointed as us with 1959 birth year got messed up, and additional folks who would have been able to wait until age 74 got left out. But whatever, I’m not going to hold my breath for fixes. If they happen great. At least one more year will help both of us.

BTW I’ve been trying to keep our slowest growing assets in the tax deferred accounts. They are about 20% of our retirement assets, so we don’t have the bigger first world problem some people face.

DH swears he’s going to use his RMD for QCDs anyway.
Knowing him though, he’ll stick to his guns.

 

[DrRoy]

I am a 1959 so need to see the fix.

 

[cathy63]

I am a 1959 so need to see the fix.

Someone posted a link to this article at Kitces in another thread yesterday. The author claims to have knowledgeable contacts who are indicating that the text will eventually be corrected so that those born in 1959 start RMDs at age 73.
https://www.kitces.com/blog/secure-...oth-rollover-increase-qcd-student-loan-match/

... Indeed, in the days since the bill tax was released, I have spoken with multiple parties who have confirmed that both the discrepancy is a drafting error, and the intention is for the age 75 applicable age to apply to those turning 75 in 2033 or later (and thus, to those who turn 74 after December 31, 2033, not December 31, 2032). In other words, the intention of the law is that a person born in 1959 should begin RMDs at age 73, not 75...

Why they had to write this in such a convoluted way is beyond me. They could have just said "born on or after January 1, 1960" and saved a whole lot of trouble.

 

[Gumby]

No one wants to work themselves out of a job. Always leave something to be fixed later.

 

[audreyh1]

Someone posted a link to this article at Kitces in another thread yesterday. The author claims to have knowledgeable contacts who are indicating that the text will eventually be corrected so that those born in 1959 start RMDs at age 73.
https://www.kitces.com/blog/secure-...oth-rollover-increase-qcd-student-loan-match/



Why they had to write this in such a convoluted way is beyond me. They could have just said "born on or after January 1, 1960" and saved a whole lot of trouble.

Thanks for the clarification. Too bad but whatever!