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Old 05-06-2021, 07:36 PM   #41
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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?
No. You would start at age 74 in 2029. Itís phased in over 10 years. Age 75 is for folks born in 1958 or later and starts in 2032.
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Old 05-06-2021, 07:58 PM   #42
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audreyh1 >>> Thanks and I did go read all posts and see where they actually stated that.
This is very interesting change!
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Old 05-07-2021, 06:17 AM   #43
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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.
Story of my life...I have rarely been grandfathered into any changes, especially those that occurred with my military stints...my year group was usually the cutoff-sigh.

I just blank it out and keep moving forward....realizing I am still fortunate, just not as fortunate as some... 😉🙂
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Old 05-07-2021, 07:53 PM   #44
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I get to wait until 75 if this becomes law. Both sides like this as it feels good to constituents without being terribly important one way or the other to government coffers. The big impact in our case would just be a little more flexibility in making Roth conversions.
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Old 05-11-2021, 03:47 PM   #45
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Old 05-11-2021, 05:27 PM   #46
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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.
While I'm not sure what a "Mega" backdoor conversion is, since he (PageTwo) is converting a pre-tax 401K to a Roth, he will have to pay taxes on the entire amount that's converted since he's never paid taxes on his contributions.
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Old 05-12-2021, 05:40 AM   #47
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That (chunks) 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.
Doing a mega conversion would be costly for anyone with a sizeable 401K. Can't you just roll the whole thing into an IRA and then do "chunks" within a lower tax band?
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Old 05-12-2021, 06:07 AM   #48
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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)
FI; What do you mean by "involuntarily transferred to FERS from CSRS"? Did you leave the federal government and redeem your pension and then go back later, in which case you had no option to choose CSRS? That is the only scenario under which you would "involuntarily" be in FERS.

At the time that the federal government "switched" from CSRS to FERS, current employees were given the "option" to convert to FERS, but it certainly was "opt in", not forced in any way. At the time that this happened, one of the selling points was portability. If you made the switch, the government started depositing to your TSP, which of course builds faster than the CSRS pension. Only those who knew they would be leaving the government would be incented to make the switch.

I can recall one person (only one) of very large number of people in our agency who voluntarily switched. He never did leave the agency and sorely regretted making the change.
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Old 05-12-2021, 06:14 AM   #49
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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.
Audrey; We do get to switch to the new RMD withdrawal rate tables starting in 2022 though, don't we?
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Old 05-12-2021, 06:26 AM   #50
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Doing a mega conversion would be costly for anyone with a sizeable 401K. Can't you just roll the whole thing into an IRA and then do "chunks" within a lower tax band?

This is what my wife and I did with our 401ks. One more conversion to do this year for my wife's IRA and we will then be 100% converted to Roth for both of us. We did it over 11 years after retiring early in 2010.
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Old 05-12-2021, 06:34 AM   #51
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I checked the news. This isn't signed legislation. Here is the text.
https://www.congress.gov/bill/117th-...4/text?r=8&s=2
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Old 05-12-2021, 06:57 AM   #52
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Audrey; We do get to switch to the new RMD withdrawal rate tables starting in 2022 though, don't we?
Yes, that is already set and the tables are independent of required starting age anyway.
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Old 05-12-2021, 02:43 PM   #53
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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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While I'm not sure what a "Mega" backdoor conversion is, since he (PageTwo) is converting a pre-tax 401K to a Roth, he will have to pay taxes on the entire amount that's converted since he's never paid taxes on his contributions.
Oops. I mistakenly read "post-tax" 401k contributions. Post-Tax contributions are typically advantageous for a Mega-Back Door conversion. If you also have Post-Tax contributions, you may want to evaluate whether it makes sense for you.
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Old 05-12-2021, 04:45 PM   #54
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FI; What do you mean by "involuntarily transferred to FERS from CSRS"? Did you leave the federal government and redeem your pension and then go back later, in which case you had no option to choose CSRS? That is the only scenario under which you would "involuntarily" be in FERS.

At the time that the federal government "switched" from CSRS to FERS, current employees were given the "option" to convert to FERS, but it certainly was "opt in", not forced in any way. At the time that this happened, one of the selling points was portability. If you made the switch, the government started depositing to your TSP, which of course builds faster than the CSRS pension. Only those who knew they would be leaving the government would be incented to make the switch.

I can recall one person (only one) of very large number of people in our agency who voluntarily switched. He never did leave the agency and sorely regretted making the change.
There were well-documented instances of OPM improperly switching people from CSRS to FERS during the first 10 plus years when FERS was rolled out to the Government. In fact, I think some of the improperly switched CSRS-FERS folks might have been given the opportunity to be placed in CSRS-Offset retirement coverage, which is a blend of CSRS and FERS retirement programs.

I think it took legislation to straighten out the mess as documented in this House Rpt: https://www.congress.gov/106/crpt/hr...hrpt29-pt1.pdf
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Old 05-13-2021, 02:33 AM   #55
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Heh, heh, I need the money! Already took out the RMD for the year and will very likely go back for another traunch. All my other sources of "ready" cash are in ROTHs or entities I do not wish to invade due to their otherwise favorable characteristics. (Old SPDAs, Insurance, I-bonds, etc.) I'm trying to "get rid" of as much qualified money as possible before the big RMDs happen a bit later in life. Anything the gummint does to put off collecting RMDs it's gonna get later with, well, interest.

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Old 05-17-2021, 08:58 PM   #56
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I think you can do Roth conversions before 55. Has naught to do with Rule of 55.
pagetwo's original comment meant the money in the 401k was accessible without penalty beginning at age 55. The comment was not referring to Roth conversions per se as allowed by rule of 55. Rather, yes, the money coming out of 401ks "does" have to do with the rule of 55.
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Old 08-07-2021, 08:28 PM   #57
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Any news? Seems like crickets on H.R. 2954 and S. 1770.

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Old 08-07-2021, 09:01 PM   #58
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This is what my wife and I did with our 401ks. One more conversion to do this year for my wife's IRA and we will then be 100% converted to Roth for both of us. We did it over 11 years after retiring early in 2010.
Hey Alan just curious how much money you had to convert? especially if you had to watch the amount each year to keep insurance with the AFCA. As I'm thinking of pulling the plug at work and have almost 400000 to convert any suggestions much appreciated
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Old 08-07-2021, 10:38 PM   #59
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FI; What do you mean by "involuntarily transferred to FERS from CSRS"? Did you leave the federal government and redeem your pension and then go back later, in which case you had no option to choose CSRS? That is the only scenario under which you would "involuntarily" be in FERS.

At the time that the federal government "switched" from CSRS to FERS, current employees were given the "option" to convert to FERS, but it certainly was "opt in", not forced in any way. At the time that this happened, one of the selling points was portability. If you made the switch, the government started depositing to your TSP, which of course builds faster than the CSRS pension. Only those who knew they would be leaving the government would be incented to make the switch.

I can recall one person (only one) of very large number of people in our agency who voluntarily switched. He never did leave the agency and sorely regretted making the change.
Golden Sunsets---
Sorry for not getting back to the thread--

There were some of us that were actually involuntarily changed...remember that FERS didn't become enacted until 1986 and effective in 1987... BUT THEY MADE IT RETROACTIVE!! and you needed so much time in or you were changed...no "optional" situation, even for those who had been full time in CSRS for over a year/almost two years...the "option" to convert was only for those that they didn't involuntarily change...and I knew there were a few that "missed it by that much"
https://i.imgflip.com/v2edn.jpg
and didn't get converted. (it didn't have anything to do with those that left and then came back....besides, my. earliest service (temporary service) was in the late 70's (which I didn't have retirement deducted but later paid service credit for)

Remember also that the Thrift plan was also delayed quite a bit... so they tried to "make up for it " by giving an extra (IIR) 3/4% matching (and remember this was only the G fund as the C fund (and F fund) wasn't established until 1988.... so a bit of the "go go" years of the stock market wasn't available for us in the retirement plan)

The reason that you might not have heard about the retroactive part is that it likely didn't effect many, and those who could see the option would easily see that it made no sense to move from CSRS... there probably weren't many hired...I know that in my case when I left that location that the previous hire from me actually retired!! There was a huge gulf between the employees and I was virtually the only one between them. (Unfortunately, that also meant that many upward slots like management or senior level IC's were already taken by the time I had progressed (unlike some today that apparently get faster progression). One often was already working for a number of years at the more senior level before you got the opportunity for the advancement...again not like today where it seems that they get rapid advancement. )
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Old 08-08-2021, 04:21 AM   #60
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Hey Alan just curious how much money you had to convert? especially if you had to watch the amount each year to keep insurance with the AFCA. As I'm thinking of pulling the plug at work and have almost 400000 to convert any suggestions much appreciated
We had about $800k to convert but fortunately did not have to be concerned about ACA limits since I had retiree insurance from my ex-employer for the first 7 years of retirement then moved to the UK so we had another 4 years of no ACA limits to worry about while doing the conversions. Fortunately the UK-US tax treaty means that Roth conversions are taxed only in the USA so no UK taxes to worry about. Roth withdrawals are tax free in both the US and UK so the best of both worlds for us.

I had the added incentive that once I start drawing UK and US SS that I will jump from the 20% to 40% tax bracket so paying about 17% on each Roth conversion I did will save me 23% once I start making withdrawals. My wife will be in the 20% bracket even after she starts drawing her UK and US SS so a much smaller tax saving for her but still worth doing.
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