Contributor ⭐

New laws for RMD

Forum|Forum|2 years ago
August 15, 2024
15 replies
5026 views

The RMD's laws needs to be change NOW

Here is my proposal to congress:

1.- Start RMD at 80-year-old for all

2.- It should be 1% taking out for all the money (tax deferred money)

3.- Eliminate the 10-year clause for the person who get the money and 1 and 2 above should apply

Why senior citizens are penalizing by the RMD system. ir seems that they want us to be bankrupt and die with no money.

THE LAW NEEDS TO BE REVISE NOW!!!

DirkB349973

Conversationalist ⭐

You have been saving your money tax-free and RMDs are a way for the government to recover the taxes.

B

BalbonisMoleskine

Conversationalist ⭐⭐

Exactly.

A Roth isn't necessarily a safe haven, either. There's so much money in Roth accounts that eventually Congress will start taxing those distributions, such as to prop up Social Security for those who couldn't or wouldn't save.

GailL1

Community Champion ⭐⭐⭐

@BalbonisMoleskine

No they cannot start taxing a ROTH account - remember we paid taxes on the principal amount that we contributed into this type of retirement savings account - pledged to grow TAX-FREE.

But what they can do is make you add the amount that you have in a ROTH account to the balance in other tax deferred retirement savings account - IRA, 401K, etc. and then they would make you take a larger RMD out of your tax deferred retirement account yet not touching the amount in the ROTH.

This way the government gets you to have to distribute a higher RMD amount from your tax deferred retirement accounts - they get more taxes paid because the distributed amount is higher. and it depletes the tax deferred retirement account faster.

These would be ordinary income taxes - nothing to do with Social Security.

IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna

GailL1

Community Champion ⭐⭐⭐

DO a ROTH conversion BEFORE the age of 62 - then you are home free. Pay your taxes then, after that both the principal and earnings grow tax free - and require NO distributions until your death.

I converted as much as I could to a ROTH between age 59 - 62 - When I had to start withdrawing RMD from my IRA, the age was then 70.5. Then it got changed in 2017 or 2018 to I think, 72 or 73, and the withdrawal table was also changed (reduced). So I did get some benefit from this legislation. It lowered the amount I was forced to take out of the Trad. IRA.

I don’t understand your comment about “being bankrupt and die with no money” - just because money leaves the IRA doesn’t mean that you have to spend it - you just move it to some other place to make more money (taxable or not - that’s an investment choice).

ONLY distributions to a designated beneficiary who is NOT an eligible designated beneficiary must be completed within 10 years of the death of the owner.

You can’t hold on to it forever if it is a Trad IRA - it has to be taxed at some point and the government, I think, sets some pretty reasonable time periods.

SO I don’t get your point -

Review the rules:

IRS.gov Publication 590-B. 2023 TY

IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna

F

FelixZ441666Author

Contributor ⭐

Roth conversion is a patch and not a solution

I know its the way the government recover their taxes

I proposed to delay until 80 yr old at 1% max

GailL1

Community Champion ⭐⭐⭐

1% MAX in taxes? They deferred the income tax on the contributions at a much higher rate than that -

For many, maybe most, they are paying taxes in their golden years at a lower rate than when they were working. There’s the bonus.

I take out the least amount that I can for the RMD - but yes, it has started to escalate the older I get but thank goodness, I did do the ROTH conversion and at a time when it did not count for any Medicare IRMAA surcharges.

Ans the RMD tables have been redone so that my RMD has been reduced by a small amount; allowing for less tax on the RMD that I have to take out.

If you take all or some of the amount which your get from the RMD and put it into a tax fee investment vehicle - then it is still tax free earnings.

Or better yet you can do a QCD- a Qualified Charitable Distributionand make your heart sing !

IRS.gov Qualifed Charitable Distribution

Sorry, @FelixZ441666, your Age 80 / 1% plan is like a fantasy - dream on . . . .

IT‘S ALWAYS SOMETHING . . . . .. . . . Roseanne Roseannadanna

T

Tonster521

Community Champion ⭐

@FelixZ441666 What is the value of delaying RMDs to age 80? My guess is that you wish to delay Federal taxes. It may be that you have other income and do not need the RMD. As I understand your 1% per year proposal, you would have to live until age 180 to withdraw your entire account (i.e., IRA, 401 K, etc.). So, it sounds like you are proposing a wealth transfer type of account that is funded with pre-tax (tax deferred) contributions. If not for the pre-tax contributions, you are proposing a cash value life insurance policy (i.e., Whole Life, Universal Life, etc.) or a non-qualified deferred annuity. I do not think the Federal Government would agree to your proposals. Especially, if I misunderstood the 1% withdrawal and you mean 1% Federal tax.

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