Content starts here


๐Ÿ‘ด๐Ÿ‘ต Big Changes Affecting Retirement Savers (AARP Title)

Not applicable

๐Ÿ‘ด๐Ÿ‘ต Big Changes Affecting Retirement Savers (AARP Title)

โ–ถ๏ธโ€ŒTo reply, click on reply button at bottom of this post. Enter your text. Click reply button again.โ—€๏ธ


READ the comments and/or ADD a comment.


๐Ÿ—ฃJanuary 04, 2023 By Andy Markowitz, AARP.



0 Kudos
Social Butterfly

I also am one of the "70.5 kids", although the temporary (?) pandemic rule from a couple years ago put that off until 72 just before I would have been subject to the rule. So I haven't taken RMDs yet and think now I am not subject until I'm 72...two more years. Based on cash flow I could probably wait until then to draw those funds but I will probably begin drawing cash from the IRA accounts this year, even before withdrawals are required, pretty much according to my long term plan.


But another reason to draw now is for tax purposes: the period of the number of years over which the RMDs are now distributed will be slightly fewer than previously...because while the start age is increased the end age (expected longevity) is not going to change (at least not by Federal rules mandate). So the RMD taken each year will be slightly greater than before and this can theoretically and possibly push one into the next higher income tax bracket. That's never a fun thing.


I have a large spreadsheet showing my annual expected income and expenses for each year into the foreseeable future (I have tweaked this to be able to change my age at death and then see the effect this has on my survivor's circumstances; very interesting). With this I can try to adjust income so as to minimize income taxes across the years. I am not a guy with fancy investments that can be tweaked to do this, most everything is sort of a foregone conclusion... there are RMDs from IRAs (and possibly elective distributions should they be wanted for some reason), Social Security, a small private pension, and other minor income from interest and dividends; so there's not much that I can do to rejuggle the income...other than to begin drawing on IRAs to "load level" the tax load.


I did make a few mistakes. I had a large amount of savings in taxable accounts. I ran those down to essentially zero before drawing on the IRAs (which I have not started yet). I probably should have been drawing on the IRAs since I stopped working; this would have kept the taxable accounts ready for any needs without having to worry over income tax on IRA withdrawals, as well as better balanced those income tax marginal rates. But "life got in the way" and I found myself moving to Canada with a number of expenses that weren't planned for years before. 

Anyway, my recommendation to others in the accumulation phase is do not overload retirement savings into IRAs (the reason mine is overloaded is because of rollovers from 401K plans). Keep some in Roths (another IRA) as well as in taxable accounts.

Honored Social Butterfly

Well too bad I am not a whole lot younger to take advantage of it - Iโ€™m one of the 70.5 kids.




It's Always Something . . . . Roseanna Roseannadanna
Showing results forย 
Showย ย onlyย  | Search instead forย 
Did you mean:ย 
Need to Know

NEW: AARP Games Tournament Tuesdays! This week, achieve a top score in Bubble Shooter and you could win $100! Learn More.

AARP Games Tournament Tuesdays

More From AARP