EO to Raise RMD Age ?!

[Helena]

.

Wow!

If President Trump can pull this off... he has a friend in me



Trump To Sign Executive Order To Make Saving for Retirement Easier


August 31, 2018


" President Donald Trump is prepared to sign an executive order in coming days with the goal of providing Americans more control over their retirement savings.

According to Politico, the expected policy announcement will have two stated goals.

First, the president will ask federal regulators to determine whether the current age limit for maintaining funds in tax-deferred retirement accounts should be raised from the current cutoff age of 70 and a half.

"The EO asks Treasury to consider whether they need to be updated," said Counselor to the Treasury Secretary Daniel Kowalksi.

A second focus of the order is expected to include a call on agencies to loosen restrictions limiting the ability of disparate small businesses to join together to offer 401k accounts for their respective employees. "


more at link

https://www.westernjournal.com/trump-sign-executive-order-make-saving-retirement-easier


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[Helena]

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Advisers back Trump's directive to ease distribution rules for retirement accounts


" They also support another part of the president's order that would help small employers offer retirement plans to workers"


Aug 31, 2018


" Investment advisers support President Donald J. Trump's effort to allow people to keep money in their retirement accounts longer.

This afternoon at an event in Charlotte, N.C., Mr. Trump will sign an executive order directing the Treasury Department to review regulations that require savers to start taking money out of 401k and individual retirement accounts at the age of 70½. The agency will determine whether the age limit should be raised to better match life expectancy.

Another part of the retirement-security executive order directs Treasury and the Labor Department to issue regulations that would make it easier for small companies to offer retirement programs for their workers. The revised rules would enable more companies to participate in multiple employer plans, which reduce costs and administrative burdens.

Many advisers were receptive to adjusting RMD requirements.

"A lot of clients don't want to take the money out; they're forced to take it out," said Edward Snyder, president and co-founder of Oaktree Financial Advisors. "Giving them the flexibility to leave the money in and grow would be welcome to them."

Many of Jim Oliver's clients work until they're well into their 70s or 80s. When they have to take RMDs, they then have to mitigate the tax effects of the move. "

more at link

http://www.investmentnews.com/artic...umps-directive-to-ease-distribution-rules-for


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[SecondCor521]

I'd like to see this happen. I would guess that people already taking RMDs could use the new factors and reduce their RMDs if they wanted to.

I also wonder about the edge case of someone 70.5 today taking an RMD and finding out next year that the new RMD start age is 72.5. Can they skip their 71.5 RMD? Glad I don't have to write the rules.

 

[Crabby Mike]

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Advisers back Trump's directive to ease distribution rules for retirement accounts


" They also support another part of the president's order that would help small employers offer retirement plans to workers"


Aug 31, 2018


" Investment advisers support President Donald J. Trump's effort to allow people to keep money in their retirement accounts longer.

This afternoon at an event in Charlotte, N.C., Mr. Trump will sign an executive order directing the Treasury Department to review regulations that require savers to start taking money out of 401k and individual retirement accounts at the age of 70½. The agency will determine whether the age limit should be raised to better match life expectancy.

Another part of the retirement-security executive order directs Treasury and the Labor Department to issue regulations that would make it easier for small companies to offer retirement programs for their workers. The revised rules would enable more companies to participate in multiple employer plans, which reduce costs and administrative burdens.

Many advisers were receptive to adjusting RMD requirements.

"A lot of clients don't want to take the money out; they're forced to take it out," said Edward Snyder, president and co-founder of Oaktree Financial Advisors. "Giving them the flexibility to leave the money in and grow would be welcome to them."

Many of Jim Oliver's clients work until they're well into their 70s or 80s. When they have to take RMDs, they then have to mitigate the tax effects of the move. "

more at link

http://www.investmentnews.com/artic...umps-directive-to-ease-distribution-rules-for


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I think they said the life expectancy tables hadn't been adjusted since 2002. It makes sense to me to update the tables, even if the change only amounts to 1.5 years or so.

 

[aaronc879]

Life expectancy in the US has gone down the last 3 years. I doubt they will increase the RMD age much, if any.

 

[Helena]

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Others have long advocated the RMD age be raised a decade, to around age 80.

That would be a God-send for many senior taxpayers.

 

[USGrant1962]

Life expectancy in the US has gone down the last 3 years. I doubt they will increase the RMD age much, if any.

Most of what I've seen written about that says it is attributable to drugs (opioids especially), alcohol, and suicide; and is concentrated in under-65s. If so that would not affect the math on RMDs.

Does anyone know if the life expectancy of a U.S. 70-year-old has increased or decreased recently?

OTOH, RMDs have nothing to do with you - they are about the government getting its hands on all those taxes you deferred.

 

[gayl]

Of course .... as soon as I take $1500 out to put into his college checking / Visa account (scholarships are being processed 'soon')

 

[Helena]

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The income level where Social Security begins to be taxable [that as never indexed for inflation since it first took effect in the 1980s] also desperately needs to be increased.

 

[wolf]

Wish RMD's are eliminated not "pushed out". My case, I do not need the RMD's yet.
But am forced to take the withdrawal, pushing me into a higher tax bracket.
I do not mind paying taxes on IRA $ withdrawals, Just want the timing to be determined
when I have bills to pay.

 

[gayl]

Of course .... as soon as I take $1500 out to put into his college checking / Visa account (scholarships are being processed 'soon')

I guess the good thing is that I would be able to determine how much I take out

 

[RobbieB]

One and a half years added to the RMD denominator won't add up to squat.

 

[Helena]

One and a half years added to the RMD denominator won't add up to squat.

If they do raise the age, hopefully they will raise it enough to matter. Like other opinions on the subject that I have read over the years... the RMD age needs to be increased to at least age 80. You can still take out any and all money [if you want to pay the taxes] before 80. It's the government mandate that FORCES you to take out whatever the government dictates you take out that is draconian and needs to be deferred as long as possible, if not totally eliminated.

 

[Ronstar]

I’d like to see RMD’s eliminated. Tax it upon a non-spousal transfer after death.

 

[RobbieB]

I knew full well the laws (created back in 1974) when I signed up and have no problem with them the way they are now.

 

[Helena]

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Since age 60 I have been taking out of my traditional IRA a few thousand each year. Because I do the math to make sure I stay under the tax threshold, I am able to avoid taxes on those distributions. This what the government does NOT want you to do after age 70. The government wants to be in control over the amount you take out every year... that is in their best interest, not yours.

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[timo2]

I’d like to see RMD’s eliminated. Tax it upon a non-spousal transfer after death.

That seems like a good idea, as it would not only take into account individual lifespans but also accomplish the goal of 401 type investments being used as actual retirement accounts and not as a hereditary instrument, which I always assumed the RMD was about.

 

[Helena]

I don't care, as it really won't affect me, as I planned for the 70 years old date. My question is if you planned also, why would you care?

I answered that in my last post.

I have planned very carefully and am able to take thousands out of my traditional IRA every year tax free because I stay under the IRS tax threshold. I will continue to do that until age 70 when the government FORCES me to take out MORE each year than I need or want. In other words, the RMD government mandate only benefits the government.

 

[timo2]

I answered that in my last post.

I have planned very carefully and am able to take thousands out of my traditional IRA every year tax free because I stay under the IRS tax threshold. I will continue to do that until age 70 when the government FORCES me to take out MORE each year than I need or want. In other words, the RMD government mandate only benefits the government.

I deleted my post you quoted because I thought it was too flippant. Sorry about that. But I will respond that it seems you are responding on political principle and not on a financial need. We all here seem to have planned properly so the actual EO does not matter right now. I can see the poor planners creating a big huff, though. But apparently the gov does not want retirement plans to be a huge hereditary tool. That's OK with me. There are other financial tools for hereditary money.

 

[bada bing]

I don't care, as it really won't affect me, as I planned for the 70 years old date. My question is if you planned also, why would you care?

I planned on age 70.5 and my plans include 8 years before RMDs to be used for Roth conversions. If I gain an extra 2 years before RMD, it alters my Roth conversion "space" materially. If they push RMDs out to age 80 - or even eliminate RMDs - that is a potentially bigger impact. It isn't a make or break amount, but I'll take it if given and say "thank you" for it.

 

[thefinancebuff]

The executive order has nothing to do with raising the required start date from 70-1/2. It's only about possibly updating the factors used in the tables.

Within 180 days of the date of this order, the Secretary of the Treasury shall, consistent with applicable law and the policy set forth in section 1 of this order, examine the life expectancy and distribution period tables in the regulations on required minimum distributions from retirement plans (67 Fed. Reg. 18988) and determine whether they should be updated to reflect current mortality data and whether such updates should be made annually or on another periodic basis.

Raising the 70-1/2 age requires new legislation.

 

[NW-Bound]

"A lot of clients don't want to take the money out; they're forced to take it out," said Edward Snyder, president and co-founder of Oaktree Financial Advisors. "Giving them the flexibility to leave the money in and grow would be welcome to them."

Many of Jim Oliver's clients work until they're well into their 70s or 80s. When they have to take RMDs, they then have to mitigate the tax effects of the move."

The retirement savings money has to be taxed sooner or later when it is spent. So, people want to keep it forever unspent? When they die, the money if not left to a younger spouse will be left to their heirs, mostly their offsprings. It will be then be taxed when distributed, and their offsprings may have a higher tax rate as they are younger and still working.

So, what is the advantage of delaying paying taxes?

 

[Helena]

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Here's another news article on the topic.

What Retirees Must Know About President Trump's Latest Tax Proposal

https://www.fool.com/investing/2018/08/31/what-retirees-must-know-about-president-trumps-lat.aspx


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[Helena]

The retirement savings money has to be taxed sooner or later when it is spent. So, people want to keep it forever unspent? When they die, the money if not left to a younger spouse will be left to their heirs, mostly their offsprings. It will be then be taxed when distributed, and their offsprings may have a higher tax rate as they are younger and still working.

So, what is the advantage of delaying paying taxes?

As I posted previously. since I am under age 70, I can take out any amount from my traditional IRA as I choose. Every year I take out thousands of dollars tax free because I stay under the IRA tax threshold for my total income. I would love to continue to take out tax free small amounts each year. But the government RMD at age 70 will FORCE me to take out much larger amounts every year that I don't need or want which will FORCE me to pay much higher taxes [including taxes on my SS that I don't have to pay now.]

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[NW-Bound]

Yes, I understood what you wrote.

What I was thinking is that, at least for some situations, paying taxes sooner may be better than paying a lot more later, either by the IRA holder or by the heirs.