EO to Raise RMD Age ?!

[Huston55]

Quote:

Originally Posted by Independent I turned 70 1/2 six weeks ago, so this is my first RMD year.

Doesn’t that mean next year is your first RMD year?

[aaronc879]

Quote:

Originally Posted by Huston55 Doesn’t that mean next year is your first RMD year?

No, your first RMD year is the year you turn 70 1/2. Technically that first year you CAN wait until the tax deadline the following year(approx. Apr 15th) but then you would have to take out two years worth in one year which is not likely to be in your best interest in terms of taxes.

[MichaelB]

From the IRS https://www.irs.gov/retirement-plans...istributions#3

Quote:

When must I receive my required minimum distribution from my IRA? You must take your first required minimum distribution for the year in which you turn age 70½. However, the first payment can be delayed until April 1 of the year following the year in which you turn 70½. For all subsequent years, including the year in which you were paid the first RMD by April 1, you must take the RMD by December 31 of the year.

[donheff]

I just turned 70 so RMDs will start in 2019. I see no advantage in waiting until April of 2020 to take them.

[gayl]

Quote:

Originally Posted by Dtail "Sandyandshirley" wrote up a comprehensive "tax hump" schedule of SS income combined with other income.

Yes but I didn't understand how to apply it to me. NWBOUND put up a much easier to understand post (see #43 table)

[Dtail]

Quote:

Originally Posted by gayl Yes but I didn't understand how to apply it to me. NWBOUND put up a much easier to understand post (see #43 table)

Agree. Had to read my referenced post a bunch of times to try and comprehend it.

[gayl]

Quote:

Originally Posted by Dtail Agree. Had to read my referenced post a bunch of times to try and comprehend it.

My 'crystal ball' sees a hike up the closest mountain/ hill / coastline in your near future .... it helps. Get out & play .... wasn't that why we FIREd?

[Dtail]

Quote:

Originally Posted by gayl My 'crystal ball' sees a hike up the closest mountain/ hill / coastline in your near future .... it helps. Get out & play .... wasn't that why we FIREd?

I know I know. However I do go out and do something physical every day - mostly pickleball and/or long walks.
This site is my relaxing indoors instead of other things......
P.S. No hills or mountains in FLA.

[Helena]

Quote:

Originally Posted by Independent I turned 70 1/2 six weeks ago, so this is my first RMD year. Sure, from a personal perspective, I'd love to eliminate RMDs entirely. Similarly, I'd love to have a special tax deduction that applies only to bald males who were born in 1947. But, if I put my public policy hat on, I understand that the gov't has to get taxes somewhere. Allowing me to save pre-tax money and defer taxes on both principal and earnings until 70+ is a huge tax advantage for savers like me. I don't know how to argue that the greater good is served by providing this tax deal. I certainly don't know how to argue that the greater good is served by allowing my kids to inherit this attractive tax position. So, I really can't complain about RMDs starting at 70 1/2.

The US government managed a long time before any income tax existed. Lincoln enacted an income tax in 1861 to pay for the civil war. In 1871 congress repealed Lincoln's income tax. The income tax we know began in the 20th century.

Someone made the analogy earlier that government needs the money to fix the potholes in the roads we use. But we all know government continually wastes our tax money on many other questionable things that are not practical, not necessary and sometimes oppressive.

Next time you think the government needs your RMD tax money to function... instead of thinking your money is going to repair potholes, think about your money going to the billions spent on foreign aid in one year.

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[pb4uski]

You seem intent on conveniently ignoring that the deal was that taxes would be DEFERRED on your retirement savings, not that those funds would be tax free. Since you knew (or should have known) that those funds would ultimately be taxed and that if you didn't withdraw them voluntarily that there was something called RMDs that forced withdrawals, why do you find that they are now actually happening so objectionable?

I'm guessing that your current marginal tax rate is lower than it was when you deferred that income... if so, you came out ahead... if not, then you were more successful than you planned because you deferred that income expecting a lower marginal tax rate in retirement... either way... you have won! Be thankful.

The government had wasteful spending both when you deferred that money and now so nothing is different.

[Bestwifeever]

Earlier this week there was a presidential statement that no fed employees would receive scheduled raises this year in salary or place of employment compensation because the country can’t afford it. I don’t understand in that case why the country doesn't need the RMD taxes to be collected as planned.

[NW-Bound]

I think the gummint is thinking about "delayed gratification", when it will be able to tax more when the geezers finally croak.


PS. When we croak, if our portfolio holds up well, my son who has no intention of marrying will be at least in the 32% tax bracket when the inherited IRA RMD is added on top of his income.

[Helena]

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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.

.

[NW-Bound]

Quote:

Originally Posted by Helena . 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.

The gummint needs more and more money. If it eliminates a tax, soon it will have to think of another tax.

And I suspect the new taxes will have to come from people with high incomes, meaning people with high salaries, or retirees with big fat retirement accounts. Can't blame them. I do not want to tax people with little money either. They do not have enough for me to take.

Quote:

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. .

For me, I think RMD is a don't care for me, as I will continue to draw money that I do not spend before the age of 70 to minimize taxes.

[Helena]

Quote:

Originally Posted by NW-Bound I think the gummint is thinking about "delayed gratification", when it will be able to tax more when the geezers finally croak. PS. When we croak, if our portfolio holds up well, my son who has no intention of marrying will be in the 32% or higher tax bracket when the inherited IRA RMD is added on top of his income.

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]

Quote:

Originally Posted by NW-Bound The gummint needs more and more money.

That's the problem in a nutshell.

The irony of history is... we have come full circle back to being serfs in a neo-feudalistic system.

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[RobbieB]

Serfs? Feudalism?

Really?

[braumeister]

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

https://www.youtube.com/watch?v=R7qT...&frags=pl%2Cwn

[Helena]

Quote:

Originally Posted by RobbieB Serfs? Feudalism? Really?

Serfs had to pay a portion of the fruits of their labor [ie, taxes] to their lords.

Here is an interesting example.

How Much Taxes Did a Medieval Peasant Pay? The numbers from Sweden

Does the quote below sound familiar ??

" The historians call this era “a decentralized plunder economy” with extremely high taxes (as well as just outright theft of peasant property) being needed to support huge military expenses. "

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[youbet]

Quote:

Originally Posted by Helena . Others have long advocated the RMD age be raised a decade, to around age 80. That would be a God-send for many senior taxpayers.

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!