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Old 08-08-2021, 05:54 AM   #61
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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.
Hey Alan thanks for sharing. I guess I'll just watch what I convert over to my Roth to keep my ACA premiums at a minimum as I have enough tax free income to live on for 4 years, so the only income I will be reporting is my interest and my conversions over to the Roth each year.
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Old 08-08-2021, 08:51 AM   #62
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Hey Alan thanks for sharing. I guess I'll just watch what I convert over to my Roth to keep my ACA premiums at a minimum as I have enough tax free income to live on for 4 years, so the only income I will be reporting is my interest and my conversions over to the Roth each year.
Another thing we did not have to look out for was IRMAA increasing our Medicare part B premiums since we are resident in England now and didn't need to apply for it when we got to age 65.
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Old 08-08-2021, 11:21 AM   #63
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HR 2954 still not on the DC radar that I can find, and this https://www.govtrack.us/congress/bills/117/hr2954 prognosticates it has a 48% of passage. We'll see...

Moving the RMD age from 70Ĺ to 72 was helpful, so I won't complain.
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Old 08-08-2021, 12:20 PM   #64
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I'm already taking RMD amounts at 68 so I guess it doesn't really matter to me.



Unless it does?
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Old 08-08-2021, 07:34 PM   #65
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This effects me. In 2022 as things stand now, I will have to take my 1st RMD.

If this passes this year (I forget if they are thinking of moving the 1st RMD to age 73 but I think that was the case) then I would not have to take an RMD next year. If they passed that in 2022 what happens if they drag it out to late December? That would effect people who would have had to take the RMD but changing it in say late December then you would not have had to take the RMD.

Do you get to return the money and owe no tax if you took the RMD say in May or October or are you SOL?

I did not want to wait late in the year in case the market was down and add to that, getting things done due to taxes makes December a crazy month, God forbid your RMD gets screwed up and you get hit with the penalty.
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Old 08-08-2021, 07:43 PM   #66
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Hey Alan thanks for sharing. I guess I'll just watch what I convert over to my Roth to keep my ACA premiums at a minimum as I have enough tax free income to live on for 4 years, so the only income I will be reporting is my interest and my conversions over to the Roth each year.


ACA premiums will be far less affected in 2021 and 2022 due to the American Rescue Plan, so this year and next are good years make Roth conversions if you are getting HI through the ACA.
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Old 08-09-2021, 01:37 AM   #67
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I did not want to wait late in the year in case the market was down and add to that, getting things done due to taxes makes December a crazy month, God forbid your RMD gets screwed up and you get hit with the penalty.
I’m curious how this works. Is the $ amount a percentage of the closing value of your accounts on Dec 31st the preceding year? If so then no matter how the value of the IRAs change in the year following, the $ amount is the same so how can you get hit with a tax penalty?

https://www.irs.gov/retirement-plans...ributions-rmds

Quote:
Calculating the required minimum distribution
The required minimum distribution for any year is the account balance as of the end of the immediately preceding calendar year divided by a distribution period from the IRS’s “Uniform Lifetime Table.”
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Old 08-09-2021, 06:04 AM   #68
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The amount is indeed based on the Dec 31 value from the prior year.

You can also always set funds aside within the IRA for later RMD to avoid market volatility for just that portion.

IMO the law would have to pass this year in order to go into effect in 2022, and Congress could easily change the start year before it passes. So it’s really up in the air.
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Old 08-09-2021, 06:06 AM   #69
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IMO the law would have to pass this year in order to go into effect in 2022, and Congress could easily change the start year before it passes. So itís really up in the air.
Given the legislative priorities and calendar remaining for 2021, there is no chance this will come up for a vote this year, certainly not in the Senate.
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Old 08-09-2021, 02:40 PM   #70
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This effects me. In 2022 as things stand now, I will have to take my 1st RMD.

If this passes this year (I forget if they are thinking of moving the 1st RMD to age 73 but I think that was the case) then I would not have to take an RMD next year. If they passed that in 2022 what happens if they drag it out to late December? That would effect people who would have had to take the RMD but changing it in say late December then you would not have had to take the RMD.

Do you get to return the money and owe no tax if you took the RMD say in May or October or are you SOL?
I would not worry about it.

First, a slight correction: They are talking about moving it to 75, not 73.

Second, if they follow the pattern established with the first SECURE Act, they will phase in the change in such a way that the timing you describe simply won't be an issue. With the first SECURE Act, they made the timing such that everyone in the phase-in window had several months to a year or more to take or not take any applicable first RMD.

So your last question is N/A - you will have plenty of time to take an RMD, and there will be no situation where you would take an RMD and then have the law change retroactively such that you didn't need to take the RMD.

IMHO.
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Old 08-09-2021, 02:48 PM   #71
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Originally Posted by SecondCor521 View Post
I would not worry about it.

First, a slight correction: They are talking about moving it to 75, not 73.
Not quite. It was staggered 73, 74, 75.

75 was only for those born in 1958 and later.

73 for everyone who starts RMDs in 2022.
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Old 08-09-2021, 03:24 PM   #72
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Originally Posted by SecondCor521 View Post
First, a slight correction: They are talking about moving it to 75, not 73.
Not quite.

Quote:
The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act)1 generally increased the required minimum distribution age to 72. Section 105 increases the required minimum distribution age further to 73 starting on January 1, 2022 – and increases the age further to 74 starting on January 1, 2029 and 75 starting on January 1, 2032.
https://gop-waysandmeans.house.gov/w...n-5.3.21-1.pdf

But this is clearer to me…
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So it’s 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.

*Someone born in 1955 will turn 73 in 2028, so they would still be subject to RMD starting that year instead of 74.

Once you start RMDs you stay on that same schedule. Only if RMDs are exempted in a given year do you get a break.
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Old 08-09-2021, 06:02 PM   #73
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Not quite. It was staggered 73, 74, 75.

75 was only for those born in 1958 and later.

73 for everyone who starts RMDs in 2022.
That is what I thought but I forget the calendar years these ages kick in. I was certain this would effect me if they bumped it up again, this time to 73. I should have had to do an RMD this year until they changed it.

ETA - after reading more posts I see it will be age 73 for me (born in 1950). So this is surprising cuz I figured 2021 was going to be the 1st RMD and now it won't be until 2023.

Correct me if I'm wrong, my 1st RMD will be a somewhat higher percentage than had I started at age 70 1/2 which IIRC was around 3.7%?
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Old 08-09-2021, 06:07 PM   #74
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That is what I thought but I forget the calendar years these ages kick in. I was certain this would effect me if they bumped it up again, this time to 73. I should have had to do an RMD this year until they changed it.

ETA - after reading more posts I see it will be age 73 for me (born in 1950). So this is surprising cuz I figured 2021 was going to be the 1st RMD and now it won't be until 2023.

Correct me if I'm wrong, my 1st RMD will be a somewhat higher percentage than had I started at age 70 1/2 which IIRC was around 3.7%?
Unfortunately you are wrong.

I'm pretty sure that you have to start RMDs this year as future age changes won't affect that. You still have to take your first RMD this year and yearly thereafter.

In other words, RMD starting age is currently 72. If you are 72 in 2021 then you have to start this year. It doesn't matter if you turn 73 in 2022.

For those turning 72 in 2022, under the new law they could wait a year because they wouldn't turn 73 until 2023.
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Old 08-09-2021, 07:13 PM   #75
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That is what I thought but I forget the calendar years these ages kick in. I was certain this would effect me if they bumped it up again, this time to 73. I should have had to do an RMD this year until they changed it.

ETA - after reading more posts I see it will be age 73 for me (born in 1950). So this is surprising cuz I figured 2021 was going to be the 1st RMD and now it won't be until 2023.

Correct me if I'm wrong, my 1st RMD will be a somewhat higher percentage than had I started at age 70 1/2 which IIRC was around 3.7%?
This bill that's being discussed in this thread has not passed or been signed into law. The current starting age for RMDs is 72, so if you were born in 1950, you must withdraw the first RMD by 4/15/2023 (based on 12/31/2021 account values) and the second by 12/31/2023 (based on 12/31/2022 account values). Usually people don't want to take two RMDs in one year, so they withdraw the first one in the calendar year when they turn 72.

When you calculate your RMD, you will use the new tables that go into effect in 2022. Here's a comparison of the old and new tables: https://static.fmgsuite.com/media/do...d1850bfc7d.pdf Your first RMD will be 3.65% of your account value, same as it would have been before, but you're starting two years later. This assumes that your IRA beneficiary is not a spouse who is more than 10 years younger than you. If you do have a much younger spouse, you would use a different lookup table.
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Old 08-09-2021, 07:23 PM   #76
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Unfortunately you are wrong.

I'm pretty sure that you have to start RMDs this year as future age changes won't affect that. You still have to take your first RMD this year and yearly thereafter.

In other words, RMD starting age is currently 72. If you are 72 in 2021 then you have to start this year. It doesn't matter if you turn 73 in 2022.

For those turning 72 in 2022, under the new law they could wait a year because they wouldn't turn 73 until 2023.
Audrey I was born in 1950 so I am 71 this year. I'm 72 next year so my 1st RMD would be in 2022 using the 12/31/2021 account balance. No way I'd wait to 2023 and have to do 2 RMDs that year, this 1st RMD will double my current income!

ETA - when the RMD age was 70 1/2 I reached that age in early 2021, that's why I said my 1st RMD would have been in 2021. That half year was crazy, making it an even age is much clearer.
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Old 08-09-2021, 07:28 PM   #77
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This bill that's being discussed in this thread has not passed or been signed into law. The current starting age for RMDs is 72, so if you were born in 1950, you must withdraw the first RMD by 4/15/2023 (based on 12/31/2021 account values) and the second by 12/31/2023 (based on 12/31/2022 account values). Usually people don't want to take two RMDs in one year, so they withdraw the first one in the calendar year when they turn 72.

When you calculate your RMD, you will use the new tables that go into effect in 2022. Here's a comparison of the old and new tables: https://static.fmgsuite.com/media/do...d1850bfc7d.pdf Your first RMD will be 3.65% of your account value, same as it would have been before, but you're starting two years later. This assumes that your IRA beneficiary is not a spouse who is more than 10 years younger than you. If you do have a much younger spouse, you would use a different lookup table.
That's interesting. Since the RMD was pushed out 1 1/2 years I assumed the 1st RMD percentage would be like the 2nd or 3rd year's percentage from the 70 1/2 tables so I was assuming around 4% or 4.24% taking a WAG.

Thank you.
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Old 08-09-2021, 07:55 PM   #78
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Audrey I was born in 1950 so I am 71 this year. I'm 72 next year so my 1st RMD would be in 2022 using the 12/31/2021 account balance. No way I'd wait to 2023 and have to do 2 RMDs that year, this 1st RMD will double my current income!

ETA - when the RMD age was 70 1/2 I reached that age in early 2021, that's why I said my 1st RMD would have been in 2021. That half year was crazy, making it an even age is much clearer.
OK - good. I misunderstood and thought you had to take your RMD this year as you were turning 72.

So yes - if they do pass with the new ages in 2022 you would get to skip one more year.

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That's interesting. Since the RMD was pushed out 1 1/2 years I assumed the 1st RMD percentage would be like the 2nd or 3rd year's percentage from the 70 1/2 tables so I was assuming around 4% or 4.24% taking a WAG.
Right, the updated tables going into effect next year give you another break!
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