Will RMD's be eliminated?

[Spock]

One twist to this is the ACA subsidy cliffs...
pre-2020, I've been doing roth conversions up to the top of the 0% bracket as the ACA subsidy reductions above that equated to (something like) a 14% tax.

Now, its expected that todays low tax rates are going no where but up in order to at least pretend that revenues are being raised to address the massive debt increase.

The murky math question becomes: Does one turn on the afterburners (relatively speaking) on draining tax deferred despite ACA cliffs to avoid even higher future tax rates. Then again, a stroke of the pen and already taxed accounts are subject to new wealth/asset taxes.

 

[MrLoco]

From various articles I have read; it may be advantageous to NOT convert the entire t IRA to a Roth. The big elephant in the room for many of us here will be Long Term Care expenses. Twenty years from now when we are in our early 80's,in my state LTC costs for a private room in a nursing home figures to be around $20,000/month. That's close to a quarter of a million dollars a year for one person.

Now, granted, one may never need LTC, or need it for long.....but if you do why not have 3 types of accounts. Money in taxable; tax deferred; and tax free. And then withdraw as needed based on the most tax efficient manner possible. Assuming (and I know it is an assumption) the IRS will still allow one to deduct any medical/dental expenses which exceed 10% of AGI (Form 1040, Schedule A);one could withdraw from a tIRA and offset the taxes due with the cost of LTC. Also, money used for assisted living; home care would also qualify. Since medical costs for retirees will be a major expense in the coming years; I believe (hope) the IRS will allow some offset for medical expenses in retirement.

Plus, in our case, we have well into 7 figures in a tIRA. Just no way I can see us converting the entire amount , even over the next 10 years. We will convert some....but also keep some for the reasons stated above.

 

[Dtail]

One twist to this is the ACA subsidy cliffs...
pre-2020, I've been doing roth conversions up to the top of the 0% bracket as the ACA subsidy reductions above that equated to (something like) a 14% tax.

Now, its expected that todays low tax rates are going no where but up in order to at least pretend that revenues are being raised to address the massive debt increase.

The murky math question becomes: Does one turn on the afterburners (relatively speaking) on draining tax deferred despite ACA cliffs to avoid even higher future tax rates. Then again, a stroke of the pen and already taxed accounts are subject to new wealth/asset taxes.

Yup, that is the dilemma. For me and my brother, we are saving 23k yearly due to managing MAGI for the ACA.
He has no TIRA and I will wait until 65 to do some Roth conversions and spending down more of the TIRA.

 

[Rustic23]

I would rather see a rule change that changed how RMDs are treated for MAGI, SS, Medicare, and other areas where higher income increases the amount suspectable to taxes or raises the cost of a given program to the tax payer.

 

[Spock]

From various articles I have read; it may be advantageous to NOT convert the entire t IRA to a Roth. The big elephant in the room for many of us here will be Long Term Care expenses. Twenty years from now when we are in our early 80's,in my state LTC costs for a private room in a nursing home figures to be around $20,000/month. That's close to a quarter of a million dollars a year for one person.

Now, granted, one may never need LTC, or need it for long.....but if you do why not have 3 types of accounts. Money in taxable; tax deferred; and tax free. And then withdraw as needed based on the most tax efficient manner possible. Assuming (and I know it is an assumption) the IRS will still allow one to deduct any medical/dental expenses which exceed 10% of AGI (Form 1040, Schedule A);one could withdraw from a tIRA and offset the taxes due with the cost of LTC. Also, money used for assisted living; home care would also qualify. Since medical costs for retirees will be a major expense in the coming years; I believe (hope) the IRS will allow some offset for medical expenses in retirement.

Plus, in our case, we have well into 7 figures in a tIRA. Just no way I can see us converting the entire amount , even over the next 10 years. We will convert some....but also keep some for the reasons stated above.

Only about 25% of the assisted living LTC costs count as medical (varies by facitlity). The "room and board/meals", housekeeping, laundry costs, etc are not deductible. The % is probably higher for SNF. No idea about memory care.

 

[Brat]

My primary reason for converting a tIRA to Roth is to avoid what I believe will be a significant increase in tax rates in the future. We have an excellent LTC policy so care costs should not be an issue... and at the way we are rolling we will die 'with our boots on'.

 

[bolt]

Interesting thought. Who would be lobbying to keep IRA RMD's as currently implemented?

I'm speculating ejman. Great thread btw.
Maybe a recognized lobbyist will be AARP to attract us elderly customers back to their stated advocacies & products. A branded advocate is preferable. Along w/elder services organizations that might jockey to fill a "we're over 60 and we vote" non-profit movement, .....hopefully.

Good luck & Best wishes....

 

[jazz4cash]

I'm speculating ejman. Great thread btw.

Maybe a recognized lobbyist will be AARP to attract us elderly customers back to their stated advocacies & products. A branded advocate is preferable. Along w/elder services organizations that might jockey to fill a "we're over 60 and we vote" non-profit movement, .....hopefully.



Good luck & Best wishes....

I don’t follow your logic at all.

The article title is misleading. It says only 20% of account holders withdraw the minimum. That’s the folks on this forum. 80% of account holders withdraw more because they need it for expenses. I was surprised by this but I always thought all the fuss about RMDs is overblown anyway. I’d be more concerned with increased RMDs for larger accounts.

 

[ychuck46]

Wouldn't matter

I wonder if Schwab will let us split our IRAs into a bunch of sub-$100K accounts?

Since somehow would have to commit fraud to claim only one account, wouldn't matter; you have to declare all accounts in total for RMD purposes. I know you were being facetious but thought I would point it out, just in case someone got to thinking

 

[Golden sunsets]

Only about 25% of the assisted living LTC costs count as medical (varies by facitlity). The "room and board/meals", housekeeping, laundry costs, etc are not deductible. The % is probably higher for SNF. No idea about memory care.

My Mom was in memory care and our COA advised that 100% of the monthly bill was deeductable.

 

[rayvt]

I wonder if Schwab will let us split our IRAs into a bunch of sub-$100K accounts?

The IRS says you only have one IRA. Which consists of the sum total all your accounts.

 

[Brat]

If you want to have different survivor designations multiple IRAs make sense.

 

[pb4uski]

The IRS says you only have one IRA. Which consists of the sum total all your accounts.

Not true. You can have as many IRA accounts as you want. But when you calculate RMDs you have to calculate the RMD in aggregate for all your accounts. The RMD withdrawals can then be made for whichever accounts you want... it is just that they must total to the RMD calculated based on all your accounts.

 

[youbet]

You can have as many IRA accounts as you want. But when you calculate RMDs you have to calculate the RMD in aggregate for all your accounts.

That's what rayvt said. Read his post again.

 

[pb4uski]

Ok, get it now. Strange wording though.