2022 RMD's

[DaveLeeNC]

I have read (do not recall where) speculation that RMD requirements could be changed for the year 2022 (as in reduced/eliminated for the year). Is there any reasonable expectation that this could happen? This would be beyond the updated life expectancy tables.

Thanks.

dave

ps. There is a bill that I believe has passed the house (HR 2954) that raises the age from 72 to 75. So the question about action or ultimate passage of this bill (which is a lot more than just RMD's) is in play here.

 

[Koolau]

I have not heard anything specific though I've heard the age 75 trial balloon. Heh, heh, the past changes have always been just a day late (and dollar short) for me. Now at 75, I guess it's moot.

It turns out that I've been taking MORE than the RMD calculated value because I need to reduce my qualified money in hopes of avoiding the various "cliffs" in the future. I've thought about doing Roth conversions, but really don't wish to tie up money in them (have significant Roths already.) YMMV

 

[TheWizard]

2022 is already well underway, Dave.
I've been taking equal monthly amounts toward my RMD since January. No need to make any change at this point...

 

[TheWizard]

...It turns out that I've been taking MORE than the RMD calculated value because I need to reduce my qualified money in hopes of avoiding the various "cliffs" in the future. I've thought about doing Roth conversions, but really don't wish to tie up money in them (have significant Roths already.) YMMV

There's no real "tie up" in a Roth IRA in your situation.
I'll probably do a small Roth conversion in mid December after completing my RMD, just to get my AGI up close to the next higher (projected) IRMAA tier threshold...

 

[Koolau]

There's no real "tie up" in a Roth IRA in your situation.
I'll probably do a small Roth conversion in mid December after completing my RMD, just to get my AGI up close to the next higher (projected) IRMAA tier threshold...

Heh, heh, the tie up may be mental on my part. I've never gotten into one of my Roths and I probably wouldn't if I converted yet another one. Just a personal "kink" of mine - Roths are "sacred" I guess.

 

[DaveLeeNC]

2022 is already well underway, Dave.
I've been taking equal monthly amounts toward my RMD since January. No need to make any change at this point...

I guess that is true if you assume that such a change (IF it happened) would be managed in the same way it was in 2020. That year the change was announced in March of 2020 and procedures for rolling back already taken distributions were put in place in June of that year.

https://www.irs.gov/newsroom/irs-an...accounts-that-were-waived-under-the-cares-act

dave

 

[jebmke]

this bill has been kicking around for a while now. Since this is an election year, I'd say that the chance of anything happening on this is very remote.

Also, I think the extension of the start date is phased in so depending on one's age, the change may be less than three years (72 ---> 75). I think in my case (will be 70 next year) the change would be only one year.

Given those two things, I try not to waste a single brain cell following this bill.

 

[Morgan22]

The text of the bill says that the change would take place after December 31, 2022. See below:

SEC. 106. 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 72” and inserting “the applicable age”.
(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 72” and inserting “the applicable age”.

(c) Applicable Age.—Section 401(a)(9)(C) of such Code is amended by adding at the end the following new clause:


“(v) APPLICABLE AGE.—

“(I) In the case of an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2030, the applicable age is 73.

“(II) In the case of an individual who attains age 73 after December 31, 2029, and age 74 before January 1, 2033, the applicable age is 74.

“(III) In the case of an individual who attains age 74 after December 31, 2032, the applicable age is 75.”.

(d) Conforming Amendments.—The last sentence of section 408(b) of such Code is amended by striking “age 72” and inserting “the applicable age (determined under section 401(a)(9)(C)(v) for the calendar year in which such taxable year begins)”.

(e) Effective Date.—The amendments made by this section shall apply to distributions required to be made after December 31, 2022, with respect to individuals who attain age 72 after such date.

 

[DaveLeeNC]

this bill has been kicking around for a while now. Since this is an election year, I'd say that the chance of anything happening on this is very remote.

Also, I think the extension of the start date is phased in so depending on one's age, the change may be less than three years (72 ---> 75). I think in my case (will be 70 next year) the change would be only one year.

Given those two things, I try not to waste a single brain cell following this bill.

I am not sure how much that I am getting out of my brain cells these days. But wasting money .....

dave

 

[TheWizard]

Heh, heh, the tie up may be mental on my part. I've never gotten into one of my Roths and I probably wouldn't if I converted yet another one. Just a personal "kink" of mine - Roths are "sacred" I guess.

Ok, I guess I'm somewhat similar then, in that I've been moving money into my Roth IRA over the past decade-plus and have never taken any out yet.

I am planning to order a new car before long to replace my 2008 vehicle. Depending on how the lots on my taxable account stand when I need to withdraw $40k or so, I may withdraw entirely from taxable and take a loss for tax purposes or I may withdraw a portion from my Roth to keep my AGI (for 2023 most likely) from getting me into the next higher IRMAA tier.

My Roth IRA is a bit of a financial security blanket...

 

[SecondCor521]

I have read (do not recall where) speculation that RMD requirements could be changed for the year 2022 (as in reduced/eliminated for the year). Is there any reasonable expectation that this could happen? This would be beyond the updated life expectancy tables.

Thanks.

dave

ps. There is a bill that I believe has passed the house (HR 2954) that raises the age from 72 to 75. So the question about action or ultimate passage of this bill (which is a lot more than just RMD's) is in play here.

I think the chances of 2022 RMDs being eliminated as they were in 2020 is pretty much zero. Some people have speculated such, but that seems to me to be wishful thinking on their part.

My understanding is that there are (at least) two "SECURE 2.0" bills - a House version and a Senate version. These have some chance of passing, but the bills would likely need to be reconciled. And since these are both pending legislation not anywhere near being enacted at this point, I think discussion of them is off limits per forum rules.

 

[harllee]

Dave, when you are doing your RMDs remember that if you want to do any charitable giving this year you can do it from your IRA (Qualified Charitable Distribution--up to a max of $100,000) and the amount going to charity will reduce the amount of your RMD.

By the way I love your town of Pinehurst. I use to come to MidPines for Peggy Kirk Belle's golf school every year, what a treat.

 

[Graybeard]

I guess that is true if you assume that such a change (IF it happened) would be managed in the same way it was in 2020. That year the change was announced in March of 2020 and procedures for rolling back already taken distributions were put in place in June of that year.

https://www.irs.gov/newsroom/irs-an...accounts-that-were-waived-under-the-cares-act

dave

I too was hoping the RMD would be suspended due to the terrible drop in the equity and bond markets, I need to do my 1st RMD this year. I remembered the RMD was suspended in 2020 and was hoping they'd do it again but now that I see in 2020 it was done in March, well it is getting later into this year and with many RMDs done it seems unlikely they would lift the requirement.

 

[jebmke]

I too was hoping the RMD would be suspended due to the terrible drop in the equity and bond markets, I need to do my 1st RMD this year. I remembered the RMD was suspended in 2020 and was hoping they'd do it again but now that I see in 2020 it was done in March, well it is getting later into this year and with many RMDs done it seems unlikely they would lift the requirement.

chance they will do a one time waiver again is as close to zero as you can get. I don't even think Secure 2.0 will surface between now and the end of the year; I suppose it could come back in a lame duck session but normally there aren't many days those critters work in November and December.

 

[TheWizard]

I can't imagine why it ever makes sense to the government to suspend RMDs in a given year.
It was certainly a mistake to have done it in 2020.

If you're so close to the freaking edge that it matters to you, then move your RMD for the year into a MM fund on January 2nd and withdraw it as desired over the year...

 

[Graybeard]

I can't imagine why it ever makes sense to the government to suspend RMDs in a given year.
It was certainly a mistake to have done it in 2020.

If you're so close to the freaking edge that it matters to you, then move your RMD for the year into a MM fund on January 2nd and withdraw it as desired over the year...

If you don't need the RMD for living expenses and have no real use for the money letting it sit tax deferred for another year is good. That is my case. Add to that we are taking an RMD based upon the inflated values of 12/31/2021 vs the down graded values now. I was going to get mine out of the way but now I'm sitting tight on the hopes the market will go up so the loss is less than if I did it a month ago or today. I sure don't think the market will increase back to the 2021 YE amount I had and I don't want to be fooling around in late December day by day watching so any "good" point will be my time.

 

[TheWizard]

If you don't need the RMD for living expenses and have no real use for the money letting it sit tax deferred for another year is good. That is my case. Add to that we are taking an RMD based upon the inflated values of 12/31/2021 vs the down graded values now. I was going to get mine out of the way but now I'm sitting tight on the hopes the market will go up so the loss is less than if I did it a month ago or today. I sure don't think the market will increase back to the 2021 YE amount I had and I don't want to be fooling around in late December day by day watching so any "good" point will be my time.

Well, good luck with that.
I do equal monthly RMD withdrawals, adjusted early each January for the next year.
I'm not in the mood for fussing with minor details anymore...

 

[TheWizard]

I would just recharacterize my RMD as a Roth conversion if allowed.
So go for it...

 

[braumeister]

There was already a recent thread on this so they were merged.

 

[gayl]

The text of the bill says that the change would take place after December 31, 2022. See below:



SEC. 106. 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 72” and inserting “the applicable age”.

(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 72” and inserting “the applicable age”.



(c) Applicable Age.—Section 401(a)(9)(C) of such Code is amended by adding at the end the following new clause:





“(v) APPLICABLE AGE.—



“(I) In the case of an individual who attains age 72 after December 31, 2022, and age 73 before January 1, 2030, the applicable age is 73.



“(II) In the case of an individual who attains age 73 after December 31, 2029, and age 74 before January 1, 2033, the applicable age is 74.



“(III) In the case of an individual who attains age 74 after December 31, 2032, the applicable age is 75.”.



(d) Conforming Amendments.—The last sentence of section 408(b) of such Code is amended by striking “age 72” and inserting “the applicable age (determined under section 401(a)(9)(C)(v) for the calendar year in which such taxable year begins)”.



(e) Effective Date.—The amendments made by this section shall apply to distributions required to be made after December 31, 2022, with respect to individuals who attain age 72 after such date.

If the Senate and House can agree.

 

[Accidental Retiree]

I too was hoping the RMD would be suspended due to the terrible drop in the equity and bond markets, I need to do my 1st RMD this year. I remembered the RMD was suspended in 2020 and was hoping they'd do it again but now that I see in 2020 it was done in March, well it is getting later into this year and with many RMDs done it seems unlikely they would lift the requirement.

If we don’t need our RMDs when we start them, we plan to move stocks or funds in kind from our traditional IRAs into our regular brokerage account.

If the market is down, at least we’d be paying taxes on a lower amount and give the equities time to grow, if we want.