RMD going to 72?

gwraigty said:
Actually, it negatively affects the heirs, not those who are departing. :D

Because of my poor choice to elect RMDs over 5 years rather than my life expectancy (just wanted to get it over with at the time), we went from the 15% to the 25% tax bracket for those 5 years. What made it worse was that when I realized the ramifications of my decision, I called TDAmeritrade (my brokerage at the time where I'd opened the inherited IRA) to ask if I could change my election from 5 years to my life expectancy. It was shortly after I'd made the election (within a month or two) and I'd not yet taken my first RMD. It was still the same year my father had passed. That's how quickly I tried to "fix" things. Yet, I was told I couldn't change my mind. I have no idea if that was true or if someone was just being lazy. I was not in a frame of mind at the time to pursue the matter.
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I inherited an IRA and took it in a lump sum because my then Wachovia broker told me they could not transfer in an "inherited IRA". :facepalm: I was pretty much a novice with investing at that point. It was not long after that I left that brokerage. Hiers are subject to all sorts of shenanigans!
 
sheehs1 said:
I inherited an IRA and took it in a lump sum because my then Wachovia broker told me they could not transfer in an "inherited IRA". :facepalm: I was pretty much a novice with investing at that point. It was not long after that I left that brokerage. Hiers are subject to all sorts of shenanigans!
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Ugh. Terrible stories. This is why I not only have my account numbers written down, but instructions/advice on what to do with accounts like this so they don't get steered wrong by someone who has no stake in it.
 
There’s some wisdom in the saying that it’s best to die penniless. Not saying don’t pass on something to heirs but not so much that their lives are messed up. Also, passing on some wealth doesn’t have to happen close to one’s death; the smartest ones do this early in life.
 
sheehs1 said:
I inherited an IRA and took it in a lump sum because my then Wachovia broker told me they could not transfer in an "inherited IRA". :facepalm: I was pretty much a novice with investing at that point. It was not long after that I left that brokerage. Hiers are subject to all sorts of shenanigans!
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It's scary. Our taxable account was with TDA, so it seemed a no-brainer to open the inherited IRA with them in 2008. I'd done a little research and knew that I'd be required to take RMD's soon. My first call to TDA to clarify some things got me to someone in the retirement department who didn't seem to understand the difference between an inherited IRA and a regular IRA. He told me that I couldn't take RMD's at my age. :facepalm: When I said that I was talking about an inherited IRA to receive funds from my late father's retirement account, he was clueless. If I'd have listened to him, I'd have lost half the funds in an IRS penalty! :mad: Though it was primarily something else that caused us to leave them.
 
gwraigty said:
It's scary. .
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It was an overwhelming time that is for sure- death of the first parent-almost 20 years ago. We all learned a lot and were more savy by the time our father passed away. Yes, I was pissed when I figured out the guy lied to me. I guess he didn't want to be bothered with RMD calculations based on my life expectancy for me.

And while I know my IRA's are for my retirement and intend to use them via RMD's (which is still a little ways off), I can't ignore the implications to my heirs at my death with this proposed legislation.

Maybe a moderator will come along and fix my typo and spelling of "hiers" in my previous post...since it is past the "edit" time frame!
 
Relative to inherited IRAs and the required calculations- I moved an inherited IRA to Fidelity. Easy to do, and they automatically do the calculations and post your status on the account page.

One of the issues with dumping a large inherited IRA onto your heirs, with legislation that requires it to be emptied in 5 years, is the issue that the required dispersal could create a surge of income that would influence your heirs to 'retire early' at the peak of their earning years. Assuming they may not be as smart and knowledgeable as all of us, you could see folks retire thinking they had it all figured out, only to be short of cash flow and aged out of the job market when they realize that they need to go back to work. Sort of like the challenges that some lottery winners get when they blow through their winnings.

We see folks that think they can retire at age 30 with $300,000. If that money is in the form of an inherited IRA, they could figure they can retire! Only to run out of money and be looking for a job at age 40 with out-of-practice job skills.
 
copyright1997reloaded said:
So now all that money that was put into these plans under the assumption that heirs can draw down over their (beneficiary) lifetimes is out the door.
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+1 to this. In fact, I would characterize it, in effect, as a new "estate tax". Legal? Of course, congress writes the laws. But eliminating the stretch is changing the rules to the detriment of savers/investors who planned to leave a certain legacy. After raising the estate tax exemption to $11 million+, the optics appear to be congress going after (portions of) estates at a much lower threshold.

They could have proposed the distribution of a lesser amount over the 5/10 yrs...(for example: any amount in excess of $5 million at the time of death);...but they appear to want the distribution of all of it, for those who don't meet the exceptions.

I hope eliminating the stretch is dropped/fails to pass as currently proposed.

Lastly, as pointed out in earlier posts, if the actuarial tables haven't been updated in some time, then moving the RMD to 72, or changing the RMD % amounts to better reflect updated life expectancies sounds appropriate (and a no brainer from a policy perspective). This, I strongly support.
 
sheehs1 said:
It was an overwhelming time that is for sure- death of the first parent-almost 20 years ago. We all learned a lot and were more savy by the time our father passed away. Yes, I was pissed when I figured out the guy lied to me. I guess he didn't want to be bothered with RMD calculations based on my life expectancy for me.

And while I know my IRA's are for my retirement and intend to use them via RMD's (which is still a little ways off), I can't ignore the implications to my heirs at my death with this proposed legislation.

Maybe a moderator will come along and fix my typo and spelling of "hiers" in my previous post...since it is past the "edit" time frame!
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All communication with FAs should be via email, even with using a phone, follow up with an email reiterating what was discussed.
 
RunningBum said:
Ugh. Terrible stories. This is why I not only have my account numbers written down, but instructions/advice on what to do with accounts like this so they don't get steered wrong by someone who has no stake in it.
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I ran into a similar problem. When my grandmother passed away in 2015, I inherited a small IRA from her. Nothing major, just $4800. But in my tax bracket at the time, I would have lost about 1/3 of its value cashing it in. So, I wanted to roll it into an inherited IRA.



My first choice was to go with Janus. I always had good luck with them. But, they had no idea how to even do an inherited IRA. So then I went with Fidelity, and it was no problem.


When my Dad passed away in 2017, I inherited an IRA from him, as well. Since I had good luck with Fidelity, I just went with them again.
 
bingybear said:
I assume the stretch IRA is left unchanged too.
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Not mentioned in the article, that I could see. But I would assume the opposite, since the original Senate bill referenced earlier in the thread eliminated the stretch IRA in most cases.
 
It would sure help the discussion to link the actual bill and not just a media report.
 
Dtail said:
Would be nice if this would pass. In 2030, I will be 70.
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+1

I'll be 69 in 2030. DW will be 70. I like the additional 5 years for Roth conversions. But with SS starting at 70, there won't be much room for conversions at a rate lower than after RMDs start. So, not sure whether this will be helpful or not in that regard. But certainly a move in the right direction, should it pass.
 
MichaelB said:
It would sure help the discussion to link the actual bill and not just a media report.
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As Helena noted as a new Bill, I'm guessing this is it

As some of the media notes there are many overlaps in these bills, I would expect that many of theses bills will be stuck as bills until the differences are resolved.
 
Now would be nice but 2023 :facepalm:.... No value to me.
 
bingybear said:
As Helena noted as a new Bill, I'm guessing this is it

As some of the media notes there are many overlaps in these bills, I would expect that many of theses bills will be stuck as bills until the differences are resolved.
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Thanks for the link.
 
Cobra9777 said:
+1

I'll be 69 in 2030. DW will be 70. I like the additional 5 years for Roth conversions. But with SS starting at 70, there won't be much room for conversions at a rate lower than after RMDs start. So, not sure whether this will be helpful or not in that regard. But certainly a move in the right direction, should it pass.
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I was thinking the same thing with SS at 70 y.o., but the 12% bracket including the standard deduction still is a little of 100k, so there could be some Roth conversion room.

At the very least, there would be delays in paying for taxes for monies not necessarily wholly needed for 5 years.
 
I wonder if someone on the cusp, needing to do RMD's in 2022 at age 70-1/2, would be able to call a "redo" in 2023 at age 71 with no RMD's then start up again in 2024? I know it is just a bill at the moment. I don't understand why the change would be delayed and isn't effective Jan 1 of the year following the signing of the law.
 
CardsFan said:
Not mentioned in the article, that I could see. But I would assume the opposite, since the original Senate bill referenced earlier in the thread eliminated the stretch IRA in most cases.
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In the Senate bill linked by @bingybear, the stretch IRA appears to remain unaffected from what I could tell by a review of the table of contents.
 
SecondCor521 said:
In the Senate bill linked by @bingybear, the stretch IRA appears to remain unaffected from what I could tell by a review of the table of contents.
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That would be good, if true.

My wife turns 70 late 2022 and is not required to take an RMD until 2023. Sounds like under this latest bill she would get a delay from 2023 to 2024.

In my case, I would be turning 71 in 2030, so I would be able to get the delay until age 75.
 
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bingybear said:
As Helena noted as a new Bill, I'm guessing this is it

As some of the media notes there are many overlaps in these bills, I would expect that many of theses bills will be stuck as bills until the differences are resolved.
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That would be good for me, since it would hold off RMDs until 2040, which is when I would turn 75. It doesn't seem too many changes in the laws regarding retirement benefit Generation X, but this would be one.
 
SecondCor521 said:
In the Senate bill linked by @bingybear, the stretch IRA appears to remain unaffected from what I could tell by a review of the table of contents.
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Yeah. That was my take away from the link to the actual bill. Now we get to wait and see what, if anything, gets negotiated and enacted.
 
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