Wow, if this comes to pass then a lot of the Roth conversions may become of questionable benefit. Per Forbes article "More changes are coming to required minimum distributions (RMDs) from retirement accounts. One change could be their complete elimination." https://www.forbes.com/sites/bobcarlson/2020/04/29/is-the-end-of-rmds-coming/#5b66b007353c
Will RMD's be eliminated?
- Thread starter ejman
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mickeyd
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My retirement account is way more than this, but any tax relief for anyone is a good thing IMHO.
copyright1997reloaded
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Eliminating RMD's for IRA's under 100K would be meaningless for the vast majority of ER.org participants.
davebarnes
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This would be meaningless to us.
The 10-year forced payout for heirs is the larger driving factor for moving money out of tIRAs to Roths.
RMDs just aren't that large. Mine was $18K this year and will shrink (to $13K) next year because of my Roth conversion.
The 10-year forced payout for heirs is the larger driving factor for moving money out of tIRAs to Roths.
RMDs just aren't that large. Mine was $18K this year and will shrink (to $13K) next year because of my Roth conversion.
OldShooter
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I wonder if Schwab will let us split our IRAs into a bunch of sub-$100K accounts?
Midpack
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My first reaction was bad in that I’ve aggressively converted this year and last. OTOH as long as they continue to allow Roth conversions, it won’t matter to me since I’m convinced tax rates are bound to go up over my remaining lifetime so I’d rather pay lower rates now. And we don’t have immediate heirs.
pb4uski
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copyright1997reloaded
Thinks s/he gets paid by the post
This is the exact reason I stopped doing tax-deferred contributions and have switched over to Roth only. When I stop working (assuming it isn't because I dropped dead) I will start to do Roth conversions.
OTOH, my IRA balance has decreased significantly this year, so it is like I already did a few years of Roth conversion (except as if it got lost in the conversion)
Car-Guy
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I'd take the 100k break but it sure ain't much! Simply add another zero and that would be somewhat helpful.
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Agreed but if this comes to pass the $100k limit was only a proposal under Obama's 2016 budget. "They" think much bigger these days:
"Eliminating RMDs for at least some IRAs isn’t a new idea. President Obama’s budget for fiscal year 2016 included a package of IRA proposals. One of them would have eliminated RMDs for taxpayers with retirement account assets of $100,000 or less.
Putting a cap on the IRAs that would avoid RMDs would allow Congress to eliminate the RMD hassle for many taxpayers while forcing those who are financially better off to distribute a portion of their IRAs each year. A cap higher than $100,000 would spare most people who consider themselves middle class from the hassle while continuing RMDs for those who can be labeled as “rich.”
I wouldn't be surprised if IRAs in the $100K to $999K would be considered "middle class" with only amounts over $1 M considered "rich"
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WyomingLife
Recycles dryer sheets
+1
The sovereign is spending trillions meanwhile, and will be looking for dollars thereafter. Plan accordingly.
Oh, and there is an election 6 months from now.
bolt
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Lobbying w/defuse this madness.
CardsFan
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I don't see this really happening, at least not a full RMD elimination. The tax man is entitled to the deferred taxes.
Regarding the bold above by me, I see just the opposite. With the SECURE act our DS would be required to empty any tIRA within 10 years. If we could continue Roth conversions through our 70's, we could lessen the tax burden for him ( he is already in the 22-24% bracket, the tIRA would likely push him higher, and with current spending, the only way for taxes to go is up). I don't expect it to happen, but if it did, Roth conversions would continue.
Thast will not help. You take the RMD on the total of ALL your iRA accounts. Right now I have 2 accounts and have to take the RMD on the total of them.I wonder if Schwab will let us split our IRAs into a bunch of sub-$100K accounts?
That is also the way we see it. If we live long enough to get everything converted, then it becomes a mute point. (Just making sure everyone is paying attention!) If we croak relatively early, the 10 year RMD for the boys would hit during their peak earning years, and the resulting tax burden would be high.
Hopefully, we will continue to do conversions, and the markets will replenish the account such that they still have lots of taxes to pay.
interesting to see a number of posters are thinking about this possible development in terms of the next generation. I was thinking in terms of the tax torpedo.
CardsFan
Thinks s/he gets paid by the post
Well, your hypothetical would eliminate the torpedo. That opens the question: are there any other reasons to Roth convert, and inheritance is one of them.
That said, I fully expect to meet the tax torpedo head on, no matter what I do. Not complaining. It means we have saved well and accumulated more than expected.
USGrant1962
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FWIW, I like Bob Carlson and his book is great, but he is just speculating here. Don't get too spun up.
Interesting thought. Who would be lobbying to keep IRA RMD's as currently implemented?
RetiredAt55.5
Full time employment: Posting here.
All your IRA and 401K accounts. I think.
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes.
We have been converting $100K+ per year from TIRA to Roths since retirement. The goal was to keep taxes low, and that strategy has been working as planned. We are close enough that at Jan of next year, we will have converted the bulk of our tIRAs and be near $100K left in tIRA.
Then we can start taking social security. This strategy was intended to have taxes under tiered progressive rates still manageable, and minimize headaches for passing assets later.
Everyone's situation is different. But we found it useful to track the various rules of SocSec, taxes, and Roth conversion when deciding between spending vs conversions. For us, the best strategy was not intuitive. It wasn't until we ran our numbers ourselves that our best path became clear.
BTW, every financial advisor that we talked to got it wrong, making obvious (to us) mistakes in key assumptions. Running our own numbers mattered and having confidence while ignoring advice of experts mattered more.
To be fair, we were outliers in how we were set up to begin retirement. FAs that we talked to didn't grasp how much that mattered and resisted giving advice that went against their industry wide accepted practices.
Good luck with your decisions. It was thanks to the smart people here that I learned what would work for us.
Then we can start taking social security. This strategy was intended to have taxes under tiered progressive rates still manageable, and minimize headaches for passing assets later.
Everyone's situation is different. But we found it useful to track the various rules of SocSec, taxes, and Roth conversion when deciding between spending vs conversions. For us, the best strategy was not intuitive. It wasn't until we ran our numbers ourselves that our best path became clear.
BTW, every financial advisor that we talked to got it wrong, making obvious (to us) mistakes in key assumptions. Running our own numbers mattered and having confidence while ignoring advice of experts mattered more.
To be fair, we were outliers in how we were set up to begin retirement. FAs that we talked to didn't grasp how much that mattered and resisted giving advice that went against their industry wide accepted practices.
Good luck with your decisions. It was thanks to the smart people here that I learned what would work for us.
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pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I believe you, but can you elaborate a bit? It might be helpful to other viewers.
