SECURE Act - your thoughts

[Big_Hitter]

No where is the bill. I'll help go through it

link to bill:

https://www.congress.gov/bill/116th-congress/house-bill/1865/text

 

[jollystomper]

has anyone made it through the 1800 pages yet? I think the age 72 RMD is only for those who turn 72 after 12/31/19?

From the Bill:

SEC. 114. INCREASE IN AGE FOR REQUIRED BEGINNING DATE FOR MANDATORY DISTRIBUTIONS. (a) In General.--Section 401(a)(9)(C)(i)(I) of the Internal Revenue Code of 1986 is amended by striking ``age 70\1/2\'' and inserting ``age 72''. (b) Spouse Beneficiaries; Special Rule for Owners.--Subparagraphs (B)(iv)(I) and (C)(ii)(I) of section 401(a)(9) of such Code are each amended by striking ``age 70\1/2\'' and inserting ``age 72''. (c) Conforming Amendments.--The last sentence of section 408(b) of such Code is amended by striking ``age 70\1/2\'' and inserting ``age 72''. (d) Effective Date.--The amendments made by this section shall apply to distributions required to be made after December 31, 2019, with respect to individuals who attain age 70\1/2\ after such date.

 

[HFWR]

do you live in san diego? We have a very expensive municipal water project underway called "pure water". That is the name they selected after "toilet to tap" didn't test well. It's recycled sewage to potable water.

 

[cbbennet]

link to bill:

https://www.congress.gov/bill/116th-congress/house-bill/1865/text

I downloaded the PDF and searched for Title IV - Revenue Provisions. I think it is on page 110 where changes to RMDs are described.

 

[ExFlyBoy5]

I downloaded the PDF and searched for Title IV - Revenue Provisions. I think it is on page 110 where changes to RMDs are described.

The RMD is in section 401 pg 643 of 715 of embedded PDF. It does appear to have a "grandfather" clause.

(b) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided in this subsection,
the amendments made by this section shall apply to distributions with respect to employees who die after December 31,
2019.

 

[Godzilla]

I've seen some articles in the press mention that the elimination of stretch IRAs will NOT apply to those inherited before the end of 2019.

Is that actually correct? I can't find any mentions of it in the text of the bill.

 

[gwraigty]

I've seen some articles in the press mention that the elimination of stretch IRAs will NOT apply to those inherited before the end of 2019.

Is that actually correct? I can't find any mentions of it in the text of the bill.

Please read through the thread. After my post #100, a few others linked to the actual text of the bill.

 

[Another Reader]

The deferral of RMD's to age 72 is being touted as a benefit. However, wouldn't the IRS construct a new, shorter life expectancy table that will require you to take out more earlier? If that happens, is this really much of a "benefit?"

 

[Godzilla]

Please read through the thread. After my post #100, a few others linked to the actual text of the bill.

I've skimmed through page 644 of the document so far, and I still get the impression that all inherited IRAs will be affected, not just ones inherited after December 31, 2019.

 

[Gumby]

The deferral of RMD's to age 72 is being touted as a benefit. However, wouldn't the IRS construct a new, shorter life expectancy table that will require you to take out more earlier? If that happens, is this really much of a "benefit?"

The same thought occurred to me, but I would expect that to be offset by the 2 extra years to Roth convert before the RMDs hit.

 

[Alexi]

has anyone made it through the 1800 pages yet?

I think the age 72 RMD is only for those who turn 72 after 12/31/19?

That's my understanding.

 

[meierlde]

Do you live in San Diego? We have a very expensive municipal water project underway called "Pure Water". That is the name they selected after "Toilet to Tap" didn't test well. It's recycled sewage to potable water.

It should be noted that New Orleans gets its water from the Mississippi river
river a lot of whose water has been thru domestic use and the like upstream, (in fact all the way to and including Chicago, see the sanitary and shipping canal). Note of course that there is natural dilution here at least by the time you get to Saint Louis.

 

[Sunset]

We all have a "toilet to tap" system. All municipal waste is screened,treated, seperated, filtered, and put back into to water courses where it is diluted and used again downstream.

Yes, but normally it's other towns that use the water downstream, as smart thinking towns put the inlet pipe upstream of their own outlet pipe.

Actually it's smart as it gives nature a little time to finish off the sewage water treatment naturally..

 

[meierlde]

The deferral of RMD's to age 72 is being touted as a benefit. However, wouldn't the IRS construct a new, shorter life expectancy table that will require you to take out more earlier? If that happens, is this really much of a "benefit?"

Actually as mentioned earlier in this thread the IRS is extending life expectancy in the IRA tables, and thus increasing the size of the divisor in the RMD formula thus decreasing the amount of withdrawals. But if you expect tax rates to go up sooner or later taking withdrawals to fill up to some bracket makes sense.

It should also be noted that if you have large medical expenses such as nursing home bills, and they exceed 7.5% of AGI you can withdraw the amount of these expenses essentially tax free. (the change from 10 to 7.5 percent is also in the bill for 2019 and 2020)

 

[Sunset]

The deferral of RMD's to age 72 is being touted as a benefit. However, wouldn't the IRS construct a new, shorter life expectancy table that will require you to take out more earlier? If that happens, is this really much of a "benefit?"

Even if they don't, it's still not much of a benefit for many who will take from their IRA's for spending, which is a lot of people by the time a person hits 70.5

Besides, depending upon birthday month, the difference between 70.5 (weird number) and age 72 year could only be 1 year of delay.
If you are born in August to Dec , then it really adds just a 1 calendar year delay.

 

[Dtail]

Even if they don't, it's still not much of a benefit for many who will take from their IRA's for spending, which is a lot of people by the time a person hits 70.5

Besides, depending upon birthday month, the difference between 70.5 (weird number) and age 72 year could only be 1 year of delay.
If you are born in August to Dec , then it really adds just a 1 calendar year delay.

I guess there is a minor benefit for those that will take less than 3.65% at age 70 from the TIRA.

 

[ExFlyBoy5]

I've skimmed through page 644 of the document so far, and I still get the impression that all inherited IRAs will be affected, not just ones inherited after December 31, 2019.

How do you read that? I posted the EXACT language of the bill.

IN GENERAL.—Except as provided in this subsection,
the amendments made by this section shall apply to distributions with respect to employees who die after December 31,
2019.

 

[MichaelB]

How do you read that? I posted the EXACT language of the bill.

Peace, brother. You made that clear, but not eveyone reads all the posts before posting. I bet it’s asked again before the thread comes to an end.

 

[Foodbuilder]

New Secure Act RMD act

Let's say they raise the beginning RMD age requirement to 72 as it looks like that will happen. If I turn 72 in November of 2025 when will I have to take my first RMD out? First withdrawal 2025 based on my end of year 2024 total IRA amount or first withdrawal in 2026 based on my end of year IRA total for 2025?

 

[Sunset]

I think it passed, so it did happen. Effective (I believe) Jan 01, 2020

As to when you have to actually take it, no idea. Probably follows the rules of when it used to be 70.5

 

[Dash man]

Let's say they raise the beginning RMD age requirement to 72 as it looks like that will happen. If I turn 72 in November of 2025 when will I have to take my first RMD out? First withdrawal 2025 based on my end of year 2024 total IRA amount or first withdrawal in 2026 based on my end of year IRA total for 2025?

You’ll have to take your first out in 2025. Those born in the second half of the year lost out on the two year postponement.

 

[Alexi]

Let's say they raise the beginning RMD age requirement to 72 as it looks like that will happen. If I turn 72 in November of 2025 when will I have to take my first RMD out? First withdrawal 2025 based on my end of year 2024 total IRA amount or first withdrawal in 2026 based on my end of year IRA total for 2025?

Under the new law, your RMD will be due in year 2025 the year you turn age 72.

 

[statsman]

Prior to the change to the stretch IRA rules (one Adult child as inheritor for us), I figured we would take the bare minimum from our IRAs when the time came and spend down the taxable amount. Currently, we have far more cash than common sense. Now, I wonder if we'll increase the IRA distribution amounts during the RMD years. Gotta feeling we're going to be seeing a lot of articles and books written on the subject.

 

[audreyh1]

The withdrawal is based on the prior year Dec 31 balance and must occur during the year you turn 72 OR up to April 15 of the following year (still based on Dec 31 2024). But most people avoid the second option as it means taking out two RMDs in the same calendar tax year since the deadlines are end of year after the first RMD.

So - take your first RMD in 2025 based on the Dec 31 2024 combined IRAs value.

 

[Dash man]

It should also be noted that if you have large medical expenses such as nursing home bills, and they exceed 7.5% of AGI you can withdraw the amount of these expenses essentially tax free. (the change from 10 to 7.5 percent is also in the bill for 2019 and 2020)

Do you have a reference for this? I haven’t been able to find one.