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Old 05-06-2021, 01:01 PM   #21
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Looks both ways ... Good, guess I can procrastinate a bit more .
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Old 05-06-2021, 01:23 PM   #22
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Originally Posted by chassis View Post
Is an updated RMD divisor calculator published for the proposed revised RMD age change?

I ran a quick calculation in my model with age 75 RMD using the same divisors as age 72, and it didn’t change my net worth balance much at end of planned life expectancy. This is to be expected, a regulation change that gets headlines but the real effect is small.
I don’t think one is needed. You just use your age each year. People starting later skip a few years.
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Old 05-06-2021, 01:45 PM   #23
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So itís going to be 73 for those born 1950 or later starting next year, 74 for those born in 1956* or later starting in 2029, and 75 for those born in 1958 or later.
Ding! Ding! Ding! I am a WINNAR!

Will update my RMD withdrawal spreadsheet models after I finish celebrating .
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Old 05-06-2021, 01:58 PM   #24
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I think you can do Roth conversions before 55. Has naught to do with Rule of 55.
Yes, you can do Roth conversions as long as you (a) have a (non-inherited) traditional IRA with money in it and (b) are willing to pay the associated income tax.

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Originally Posted by chassis View Post
Is an updated RMD divisor calculator published for the proposed revised RMD age change?

I ran a quick calculation in my model with age 75 RMD using the same divisors as age 72, and it didnít change my net worth balance much at end of planned life expectancy. This is to be expected, a regulation change that gets headlines but the real effect is small.
I think what someone else said about just using the existing table at whatever age you are when you are taking an RMD is correct. The bigger benefit (and perhaps not particularly big) is being able to skip the RMD and let your tax deferred growth proceed unaffected for three more years.

Depending on your current age and IRA balance, it may not make that much of a difference to you. It would probably have a larger effect on younger people with large IRA balances who don't need to take it. So not really a great winner of an idea at the end of the day, but I'll take it.

On further thought, it'll enable three more years of Roth conversions for me, which are currently appealing but by then may not be as beneficial if they change the rules more.
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Old 05-06-2021, 02:02 PM   #25
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Ding! Ding! Ding! I am a WINNAR!

Will update my RMD withdrawal spreadsheet models after I finish celebrating .
Oops, I didnít finish my post - 2032 is when RMD age increases to 75.
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Old 05-06-2021, 02:41 PM   #26
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Oops, I didnít finish my post - 2032 is when RMD age increases to 75.
Works for me and my DGF.
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Old 05-06-2021, 03:57 PM   #27
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So I will turn 75 later this year, missing out on realizing any benefit from this legislation. I also missed out on the RMD change to 72. Reminds me of my working days when after 15 years with the company I finally qualified for a third week of vacation - the same year they reduced the qualification to 5 years.

Everyone is invited to my pity party.
I'll join too! Like you, I had to start my RMD's at age 70. Oh well - - worse things have happened to both of us in our lives, I'm sure. I planned to use my TSP to fund my retirement anyway. So it did.

But in the time honored internet practice of one-upmanship, I must add that there was no ACA when I retired and yet private health insurance was sky high. So, I had to work two extra years until I was eligible for retiree insurance.

At least I did not have to choose between joining the military or getting drafted during Vietnam, like most of my male friends, being female. Being a timid and non-aggressive person, that could have been so much worse both for the military and for me.
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Old 05-06-2021, 05:18 PM   #28
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I'll be 73 this December and started RMD's at 70.5. Does anyone know for sure if I'm eligible to skip any RMD's?

PS. I will download the bill later bbut not home now. Just thought I'd ask or an early read.
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Old 05-06-2021, 05:23 PM   #29
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You could have skipped 2020 RMD (too late now), but other than that, no.
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Old 05-06-2021, 05:35 PM   #30
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Ding! Ding! Ding! I am a WINNAR!

Will update my RMD withdrawal spreadsheet models after I finish celebrating .
I'll update my spreadsheets as well, but I'm waiting until this bill gets signed into law...
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Old 05-06-2021, 05:44 PM   #31
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It looks like I'll get another delay of RMDs until January, 2023 if this gets signed into law.
This is good for me, yes, but not an incredible bonus.

I withdraw roughly the same amount as RMDs would require now, but for Roth conversions.
So in 2023, I stop Roth converting and just funnel the extra cash flow into my taxable account.
It's all good if you play your cards right...
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Old 05-06-2021, 05:57 PM   #32
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I think you can do Roth conversions before 55. Has naught to do with Rule of 55.
I've been doing conversions of after-tax contributions to my 401K for years (my plan allows high limits of after tax contributions, and lets us convert them right away, paying 0 capital gains tax). However I have left the pre-tax sub-account alone during my working years.

It just so happens that I'm retiring right as I turn 55. Given that I won't have regular income, I'll take advantage of the rule of 55 to start converting the pre-tax portion. I honestly don't know if I would have been able to convert it while working (never asked) but it would have risen my tax bracket quite a bit...

Hope this all makes sense? Thanks for any insights
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Old 05-06-2021, 06:07 PM   #33
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You would do "chunks" to stay in a lower tax bracket (I think)
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That makes sense if: (1) your 401k Plan Description will allow it and, (2) any tax savings are worth the effort. For me, my Plan Description allowed the Mega-Back Door conversion but, only once. Also remember that tax is due on only the "earnings", which must follow their original associated Post-Tax 401k contributions. So, perhaps, the tax on the earnings might not be large enough for you want to do it twice. YMMV.
Correct - the model I'm using shows that I'll stay in a lower tax bracket by doing partial conversions over several years. However I'll double check that that's allowed by the plan. Otherwise I guess I'll have to do just one massive conversion... tricky to come up with the cash for the tax bill unless it can be taken from the account itself.

Huston55 - I think you're referring to converting after-tax monies. Pre-tax 401K conversions require paying tax on the total amount (which is considered ordinary income AFAIK).
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Old 05-06-2021, 06:11 PM   #34
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You could have skipped 2020 RMD (too late now), but other than that, no.
Oh we did skip 2020. As regards 2021 going forward, NO CHANGE is what I assumed. Just checking.
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Old 05-06-2021, 06:11 PM   #35
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I need to read up on this bill passing but so is this for IRA's and 401K's? So, if born in 1956 you wouldn't have to take RDM's till 75 years of age?
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Old 05-06-2021, 06:20 PM   #36
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"It's your party and you'll cry if you want to..."

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Originally Posted by REWahoo View Post
So I will turn 75 later this year, missing out on realizing any benefit from this legislation. I also missed out on the RMD change to 72. Reminds me of my working days when after 15 years with the company I finally qualified for a third week of vacation - the same year they reduced the qualification to 5 years.

Everyone is invited to my pity party.
Well, I can appreciate changes like that... I was "involuntarily" changed to FERS vs the CSRS I initially was in...I would be drawing much more now in retirement. AFA vacation, I was in use-or-lose most of my later years and had a &*#%%'ng supervisor for a couple of them that wanted to deny leave (I was a technical lead but tried to properly schedule time-off so as to not impact projects)... kind of hard to replace summers in maine or montana with winter vacations, ya think?

currently mid-60's and doing conversions... the extra years might allow more conversions at lower tax rates (still have 401k that will be converted after this IRA, as there's non-deductible and 8606-stuff I want to avoid in the future)
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Old 05-06-2021, 06:26 PM   #37
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I've been doing conversions of after-tax contributions to my 401K for years (my plan allows high limits of after tax contributions, and lets us convert them right away, paying 0 capital gains tax). However I have left the pre-tax sub-account alone during my working years.

It just so happens that I'm retiring right as I turn 55. Given that I won't have regular income, I'll take advantage of the rule of 55 to start converting the pre-tax portion. I honestly don't know if I would have been able to convert it while working (never asked) but it would have risen my tax bracket quite a bit...

Hope this all makes sense? Thanks for any insights
It's a bit confusing.

Since you're retiring in the year in which you turn 55, then you can make partial 401(k) withdrawals as long as your employer plan allows them.

However, anyone (you included, but also me included who retired at 46) can leave a job at any age, roll their 401(k) to an IRA (or set of IRAs), and then do Roth conversions from their traditional IRA to their Roth IRA. In fact that is what I did.

So the only thing you're really gaining with your method - as far as I can see - is the ability to do partial conversions from your 401(k) to your Roth IRA without the intermediate traditional IRA that others would have to do. But that's really just some paperwork shuffling and setup hassle.
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Old 05-06-2021, 06:32 PM   #38
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It's a bit confusing.

Since you're retiring in the year in which you turn 55, then you can make partial 401(k) withdrawals as long as your employer plan allows them.

However, anyone (you included, but also me included who retired at 46) can leave a job at any age, roll their 401(k) to an IRA (or set of IRAs), and then do Roth conversions from their traditional IRA to their Roth IRA. In fact that is what I did.

So the only thing you're really gaining with your method - as far as I can see - is the ability to do partial conversions from your 401(k) to your Roth IRA without the intermediate traditional IRA that others would have to do. But that's really just some paperwork shuffling and setup hassle.
Yes - I was trying to avoid the intermediate step. But that's a great point - if for some reason I can't do multiple yearly partial rollovers from the 401K, rolling the whole thing into a tIRA and then doing it from there is the perfect workaround. So thanks!
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Old 05-06-2021, 07:26 PM   #39
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I'll update my spreadsheets as well, but I'm waiting until this bill gets signed into law...
True. Who knows what might be added/changed by the time it gets thru the house and senate...
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Old 05-06-2021, 07:34 PM   #40
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Oh we did skip 2020. As regards 2021 going forward, NO CHANGE is what I assumed. Just checking.
Once you start RMDs you stay on that same schedule. Only if RMDs are exempted in a given year do you get a break.

For example, DH will be 73 in 2028, and by the new rule if passed will have to start that year at 73, even though the very next year the starting age is raised to 74.
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