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Old 10-29-2020, 07:49 AM   #21
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Wont delaying RMD just create larger distribution amounts and higher taxes? Id like the option to be able to wait longer before taking RMDs but if that money grows for three more years youll just have larger RMD amounts and a higher tax burden. Help me out- what am I missing?
You can do other things than RMDs.

For example, make Roth conversions with the money you would have withdrawn as an RMD.

Or make QCDs to drop the balance tax-free and do some good at the same time.
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Old 10-29-2020, 08:08 AM   #22
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Won’t delaying RMD just create larger distribution amounts and higher taxes? I’d like the option to be able to wait longer before taking RMDs but if that money grows for three more years you’ll just have larger RMD amounts and a higher tax burden. Help me out- what am I missing?
If you are worried about marginal tax bracket implications of large RMDs, just take money out earlier. Nothing makes you wait for RMDs - they are what you must take out, now what you can take out.
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Old 10-29-2020, 10:42 AM   #23
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Wont delaying RMD just create larger distribution amounts and higher taxes? Id like the option to be able to wait longer before taking RMDs but if that money grows for three more years youll just have larger RMD amounts and a higher tax burden. Help me out- what am I missing?
Distributions are always possible prior to the RMD point. Anyone who has a tax bomb can still siphon off funds prior to RMD age either through normal distributions of conversions.
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Old 10-29-2020, 01:51 PM   #24
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401k's were never supposed to replace the traditional pension. They were supposed to be a supplement.

https://protectpensions.org/2017/01/...ment-pensions/

Emphasis added....

Quote:
In an article published by the Wall Street Journal this week, the creators of the 401(k) reflected on the consequences of the product they promoted. The takeaway: many of the early advocates of 401(k)s now regret the “revolution” they helped to start. As you know if you are a regular reader of this blog, 401(k)s were never designed to be the primary retirement savings vehicle for working families. They were supposed to be a supplement to retirement savings through Social Security and a defined benefit pension. Gerald Facciani, a former head of the American Society of Pension Actuaries, lays it out: “The great lie is that the 401(k) was capable of replacing the old system of pensions.”
Given the above, I would say it's about time our elected representatives got going on updating retirement laws to reflect the current reality of most workers - no pension and a weak 401k plan.
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Old 10-29-2020, 02:17 PM   #25
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Wont delaying RMD just create larger distribution amounts and higher taxes? Id like the option to be able to wait longer before taking RMDs but if that money grows for three more years youll just have larger RMD amounts and a higher tax burden. Help me out- what am I missing?
I haven't given it much thought. I plan to have little or no money in my tIRA when RMD hits. I guess one advantage this gives is a few more years to convert to a Roth rather than be forced to withdraw or do QCDs.
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Old 10-29-2020, 05:51 PM   #26
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As long as they are in there tweaking things, why not simply allow IRAs to have unlimited protection from creditors just like ERISA plans are?

Increasing RMD age won't automatically create larger distributions and taxes. One always has the option of earlier voluntary withdrawals, thus no real change in the annual distribution amounts and taxes if desired.
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Old 10-29-2020, 06:28 PM   #27
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In the present environment some will be tempted to kick the tax can down the road. IMHO it fits into the current mindset of let someone else worry about it.
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Old 10-29-2020, 09:27 PM   #28
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Thanks for the responses everyone. It makes sense. Having the option to delay those RMDs for three more years is a good thing even if you choose not to wait that long.
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Old 10-29-2020, 09:50 PM   #29
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Thanks for the responses everyone. It makes sense. Having the option to delay those RMDs for three more years is a good thing even if you choose not to wait that long.
Yes. More flexibility is always better than less. It DOES give us more chances to make BAD choices (glass half empty) but also gives us a chance to make good decisions for individuals (ourselves.) It DOES also put the onus on the individual to educate themselves about the advantages and disadvantages of their decisions. SO YMMV.
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Old 10-30-2020, 07:40 AM   #30
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I'm sorry, but if someone has zero retirement savings at age 50, these changes will do little, if anything, to make that change.
I don't know. I "waited" longer than I should to start saving for retirement (thanks, divorce court!)

I pushed the max those last few years. Not sure I would have gone above it, but if I could have, it would have helped a lot.

Again, more options are a good thing.
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Old 10-30-2020, 08:16 AM   #31
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I agree that for this group, more options are always better. However, I fear that for many Americans, more options just makes it more difficult to decide which ones to choose. That may cause them to delay any decision at all and forget to take savings action early on. Or even worse, decide it is too complicated for them to handle and search for a FA (AUM style) to choose for them and handle it all. I do think I am right for a large group of people if not the majority. But I hope I am wrong.

Honestly, it was easier back when we were taught the 3 legged stool, 1/3 SS, 1/3 Pension and 1/3 our savings. 2/3rds was handled without making any choices. All we had to do was stay with our employer, and he with us. I know that plan is long gone and for many it really didn't work out. In theory it was simpler though.
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Old 10-30-2020, 08:16 AM   #32
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Wont delaying RMD just create larger distribution amounts and higher taxes? Id like the option to be able to wait longer before taking RMDs but if that money grows for three more years youll just have larger RMD amounts and a higher tax burden. Help me out- what am I missing?
Isn't that a little bit like saying I would rather have $1M in an IRA instead of $10M because I would have to withdraw more money and pay more taxes.
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Old 10-30-2020, 02:10 PM   #33
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Isn't that a little bit like saying I would rather have $1M in an IRA instead of $10M because I would have to withdraw more money and pay more taxes.
+1^
That goes along with what I wrote. You don't have to wait until RMD time, whether age 70-1/2, 72 or 75 to make withdrawals. Spend it, bank it, or Roth Convert it if you wish. Who knows if any one of us will reach 75? Statistically speaking, not all of us will.
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Old 10-31-2020, 05:31 PM   #34
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Wont delaying RMD just create larger distribution amounts and higher taxes? Id like the option to be able to wait longer before taking RMDs but if that money grows for three more years youll just have larger RMD amounts and a higher tax burden. Help me out- what am I missing?
This was my thought exactly. Your account will be worth more, and it will have to be distributed over a shorter lifespan (at least for those who are already retired/"older"), thus driving most people into an even higher tax bracket. But...I suppose it doesn't preclude someone from taking distributions at 72 ...so at worst it gives an option.

Maybe they could add a "conversion holiday" where a person could convert up to $400,000 in one year from TIRA to Roth while remaining in one of the lower tax brackets? LOL...yeah, that will happen when we land a human on Proxima b.
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Old 11-01-2020, 04:07 AM   #35
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I know its a fantasy, but I would like to see them shore up defined benefit arrangement -- both SS and finding a way to reboot pensions. Particularly portable pensions that follow people around. We've been diligent 401k-ers since the start with high incomes and good company plans. But that's not everyone.

Allowing people to retire student debt while still receiving a match is brilliant.

And if we do reboot pensions, I think its imperative that by law the pension becomes the senior most debt holder in the company. The employees get in line first during a banktruptcy/recapitalization.
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Old 11-01-2020, 07:43 AM   #36
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I haven't taken the time to dig into the student loan proposal. Is it that some workers can't afford loan payments and concurrent 401k contributions, so are paying loans and missing out on the match? So if someone is already making 401k contributions while concurrently paying student loans, that person would see no advantage?
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Old 11-02-2020, 06:39 AM   #37
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I haven't taken the time to dig into the student loan proposal. Is it that some workers can't afford loan payments and concurrent 401k contributions, so are paying loans and missing out on the match? So if someone is already making 401k contributions while concurrently paying student loans, that person would see no advantage?
I believe your understanding is correct. The official bill summary states (emphasis added):

"Section 110, Treatment of student loan payments as elective deferrals for purposes of matching contributions. Under the bill, an employer would be permitted to make matching contributions under a 401(k) plan, 403(b) plan, or SIMPLE IRA with respect to “qualified student loan payments,” the definition of which is broadly defined as any indebtedness incurred by the employee solely to pay qualified higher education expenses of the employee. Governmental employers would also be permitted to make matching contributions in a section 457(b) plan or another plan with respect to such repayments. The idea is that employees who are overwhelmed with student debt may not realistically be able to save for retirement, and thus are missing out on available matching contributions. This legislation would allow them to receive those matching contributions by reason of repaying their loan."

Source: https://waysandmeans.house.gov/sites...tion_final.pdf (page 3)
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Old 11-02-2020, 06:51 AM   #38
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I haven't taken the time to dig into the student loan proposal. Is it that some workers can't afford loan payments and concurrent 401k contributions, so are paying loans and missing out on the match? So if someone is already making 401k contributions while concurrently paying student loans, that person would see no advantage?
Well, it seems to me that they could substitute their loan payments for the 401(k) match and then use the funds they would have used for the match for something else, such as a Roth IRA or taxable investments. No?

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Old 11-03-2020, 04:48 PM   #39
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Even at 50 you have plenty of time to build wealth. Please save.
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Old 11-03-2020, 05:19 PM   #40
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According to the bill, it "permits" employers to make matching contributions for educational loans. How many employers would actually do so? Not many IMO. And would any employee want to share his or her financial situation in order to qualify for this benefit? Not me....
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