SECURE Act - your thoughts

[ziggy29]

Were you able to find out the impact on existing inherited IRA's? I have a small IRA I inherited from my mother in 2018. I was planning to just keep taking RMD's from it.

The preponderance of the evidence I've seen suggests that existing stretch IRAs would be grandfathered. But I have not seen the details of the text of anything that may have come out of conference.

 

[pb4uski]

My thoughts.... meh.

I favor nipping stretch IRAs (to grandchildren and nieces and nephews and great-grandchildren) in the bud. At the same time 10 years is onerous, particularly for younger decedents... so the pendulum swung too far.

I would have favored allowing non-spouse beneficiaries to use the decendent's life expectancy from the IRS life expectancy tables based on the decedents age in the year of death.... this would have been more than 10 years in most cases but less than the 30+ years for grandchildren or great grandchildren, et al.

 

[Alexi]

I'm spending the IRA down now.

Spend now, avoid the rush later -

I've been strategically withdrawing from my taxable IRAs for the past several years to ease the future RMD tax burden. Under the SECURE Act, I will get an extra two years to continue to do so.

 

[Sunset]

I've been strategically withdrawing from my taxable IRAs for the past several years to ease the future RMD tax burden. Under the SECURE Act, I will get an extra two years to continue to do so.

I had the same thought, but realized it doesn't change much.
We'll still be getting SS at age 70 so that combined with IRA distribution plus dividends, interest, etc... is the dreaded tax torpedo.
Exactly like if I was taking an RMD.

The only difference I can see is that we can convert the IRA money to Roth, instead of having an RMD forcing us to withdraw it to taxable account.

So a small benefit unless we need to withdraw the money to live on, and then it's no different.

 

[audreyh1]

Surprise!

Man, I was just amazed at how just one or two senators could sit on a popular bill indefinitely......

Just didn’t seem right.

There are situations where the 10-year rule won’t apply to a designated beneficiary — for so-called “eligible beneficiaries.” “EBs are: 1) Surviving spouse 2) Disabled 3) Chronically ill 4) Not more than 10 years younger than owner 5) Minor children,” Levine tweeted.

Beneficiaries who are less than 10 years younger than the deceased. That would seem to include my sibling beneficiaries. But not a couple of DH’s....

Was there some $400K provision/exemption somewhere?

 

[Tekward]

I was looking to verify the RMD to 72 change before I start adjusting spreadsheets. Helpful summary:
https://www.forbes.com/sites/jamieh...t-planning-and-increasing-taxes/#19aa278f3a4f

 

[Winemaker]

Surprise!

Man, I was just amazed at how just one or two senators could sit on a popular bill indefinitely......

Just didn’t seem right.

Popular? It wasn't popular with me, and it isn't popular with my kids! The next shoe to drop in a few years will be the automatic conversion to national annuity, and no inheritance.

 

[audreyh1]

Popular? It wasn't popular with me, and it isn't popular with my kids! The next shoe to drop in a few years will be the automatic conversion to national annuity, and no inheritance.

Popular as in strong bipartisan congressional support with a 417-3 passage in the house.

 

[Marc]

I've been strategically withdrawing from my taxable IRAs for the past several years to ease the future RMD tax burden. Under the SECURE Act, I will get an extra two years to continue to do so.

+1

 

[Telly]

Annuity salesmen prowl the halls of schools. With the "SECURE ACT", they can cut back the travel and prowl 401(k)s. Big big new hunting ground.

Love the naming of congressional bills... if one comes out that totally guts the Clean Air Act, it probably will have a moniker like "The Pure Air Act". After all, who would be against "Pure Air?"

 

[pacergal]

I do tend to agree with the basis of the SECURE Act.
After all, the purpose of IRA was to save money to fund my retirement, not to fund my children and future generations.
That's what investment accounts are for.

 

[DrBrisket]

Was there some $400K provision/exemption somewhere?

That was in the Senate version of the bill that went nowhere. The current version of the House bill has no such language. Still could change in getting the budget bill through the Senate and reconciliation--but who knows at this point.

 

[Which Roger]

Does the latest version include increasing RMD age to 72?

 

[pb4uski]

Does the latest version include increasing RMD age to 72?

According to the Forbes article, yes.

Today the law requires that most individuals take out required minimum distributions (RMDs) from their retirement accounts once you reach age 70.5. The SECURE Act would delay this requirement to age 72.

 

[pb4uski]

I do tend to agree with the basis of the SECURE Act.
After all, the purpose of IRA was to save money to fund my retirement, not to fund my children and future generations.
That's what investment accounts are for.

The author of the Forbes article agrees with you.

The SECURE Act will make significant changes to inherited retirement plans like 401(k)s, traditional IRAs and Roth IRAs. In the past, beneficiaries of these accounts could typically spread the distributions over their own life expectancy.

However, the new bill includes what is viewed as a tax-generating provision that would require most beneficiaries to distribute the account over a 10-year period. This change will accelerate the depletion of inherited accounts for many large IRAs and retirement plans.

Typically, smaller inherited accounts are liquidated fairly quickly by beneficiaries already. However, the end of the so-called “Stretch” IRA or retirement account makes a lot of sense from a public policy perspective, especially after the Supreme Court has ruled that inherited accounts are not “retirement” accounts.

As such, it does not make policy sense to allow for an extended tax benefit through the beneficiary’s retirement.

 

[GrayHare]

I wonder if Ed Slott, or similar, had not popularized stretch IRAs if lawmakers would not have found the need to effectively banish them.

The lesson is to not advertise your favorite way to reduce taxes.

I'd have preferred to banish non-publicly-traded stock from IRAs. Zuckerberg shielded lots (billions?) of FB stock gains in his Roth IRA. The tax on that one Roth IRA would make up for the stretch IRAs of lots of people.

 

[pb4uski]

Yup... like the Roth conversion horse race strategy getting Roth recharacterizations slaughtered.

 

[kgtest]

Yup... like the Roth conversion horse race strategy getting Roth recharacterizations slaughtered.

Yeah that too was BS. Never really got to take advantage of that one.

 

[PatrickA5]

I wonder if Ed Slott, or similar, had not popularized stretch IRAs if lawmakers would not have found the need to effectively banish them.

The lesson is to not advertise your favorite way to reduce taxes.

I'd have preferred to banish non-publicly-traded stock from IRAs. Zuckerberg shielded lots (billions?) of FB stock gains in his Roth IRA. The tax on that one Roth IRA would make up for the stretch IRAs of lots of people.

I think Ed loves the new law. Got an email from him today touting his NEW seminar covering the complicated new law. And now he can write new books with brand new information!

 

[kgtest]

One observation... Suicides will go up on Dec 31st...

“In some cases it may be better to die on Dec. 31, 2019 than Jan. 1, 2020,” said David Levine, an attorney at Groom Law Group.

 

[PatrickA5]

One observation... Suicides will go up on Dec 31st...

“In some cases it may be better to die on Dec. 31, 2019 than Jan. 1, 2020,” said David Levine, an attorney at Groom Law Group.

I guess that would solve my "when am I going to die" question. Seems a little drastic though.

 

[Dtail]

I guess that would solve my "when am I going to die" question. Seems a little drastic though.

Don't be selfish now.

 

[badatmath]

I feel this will break my parents heart you know. They were proud to have a little to pass on for me. . . Does that sound weird?

 

[pb4uski]

^^^ Yes, it does sound wierd. Because if your parents are passing on a little to you then the impact of the new law should be negligible.

 

[badatmath]

Yeah well never claimed to be normal.