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Retirement Savings Bills

29 Replies
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Re: Retirement Savings Bills

I am happy about the lifetime income disclosure, and I am observing with more than passing interest the status of inherited retirement accounts--especially if "stretch" opportunities are limited or removed.

Bob

 

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Re: Retirement Savings Bills

It appears this legislation (or some variant) has a decent chance of being ratified in Congress.
I like several provisions in the bills.

Opening Multiple-Employer Plans
This will make it easier for small businesses to offer retirement savings plans to its employees.
Many small businesses currently don't offer retirement plans or the plans available are substandard.

Increase Age for Required Distributions from 70 1/2 to 72 (House Bill)
Life expectancy has increased while some people don't need to withdraw the required amounts at age 70 1/2.

Lifetime Income Disclosure
Benefits statements would disclose the monthly payments a participant would receive based on the current
balance. This would allow participants to visualize how much monthly income their retirement accounts
would provide.

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Re: Retirement Savings Bills


@Learner wrote:

https://www.schwab.com/resource-center/insights/content/retirement-savings-bills-have-momentum-on-ca...


I'd love to see 2 other things in these bills - removal of UBTI considerations from retirement accounts and allowing IRA contributions regardless of earned income.  Currently, you need earned income to contribute to an IRA.

ElLobo, de la casa de la toro caca grande
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Re: Retirement Savings Bills

ElLobo,

Assuming that you have traditional IRA in mind, at least partly, pleae explain what the source of money would be.

If the answer is taxable money, it is already taxed.  With traditional IRA, withdrawals are taxable, at least for most people.

If the answer is another traditional IRA or traditional 403b, 401k, 457, etc.; what is the point?

You may have a good point but help me understand what you are thinking about what he source of money would be.  I might be missing something.

If you mean Roth IRA, let me know.

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Re: Retirement Savings Bills

"I am observing with more than passing interest the status of inherited retirement accounts--especially if "stretch" opportunities are limited or removed."

Same here. I have 2 inherited IRA's ,1 Trad(larger of the two) and 1 Roth, from my brother. The House version of 10 years would be much better tax-wise than taking it all in 5 as per the Senate. I currently live off of dividends from my taxable account and with the current "stretch" IRA options I am able to keep my taxes to a minimum. If I had to draw 20% of the Trad each year and then add the dividends I currently collect, well let's just say it wouldn't be good and I would much rather draw 10% of it each year.

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Re: Retirement Savings Bills


@MNfish wrote:

"I am observing with more than passing interest the status of inherited retirement accounts--especially if "stretch" opportunities are limited or removed."

Same here. I have 2 inherited IRA's ,1 Trad(larger of the two) and 1 Roth, from my brother. The House version of 10 years would be much better tax-wise than taking it all in 5 as per the Senate. I currently live off of dividends from my taxable account and with the current "stretch" IRA options I am able to keep my taxes to a minimum. If I had to draw 20% of the Trad each year and then add the dividends I currently collect, well let's just say it wouldn't be good and I would much rather draw 10% of it each year.


I would prefer the 5 year Senate version if the 400K exclusion stays in the bill.  400K to each kid, 400K to each grandkid, 400K to DIL, and so on.

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Re: Retirement Savings Bills

@bilperk . Exclusion may be cumulative/overall.

YBB
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Re: Retirement Savings Bills


@Learner wrote:

ElLobo,

Assuming that you have traditional IRA in mind, at least partly, pleae explain what the source of money would be.

If the answer is taxable money, it is already taxed.  With traditional IRA, withdrawals are taxable, at least for most people.

If the answer is another traditional IRA or traditional 403b, 401k, 457, etc.; what is the point?

You may have a good point but help me understand what you are thinking about what he source of money would be.  I might be missing something.

If you mean Roth IRA, let me know.


Trad IRA's can be pre-taxed, so dividends and interest from taxable accounts could be put in Trad IRA,s.  It seems like doing so would just raise ones RMDs, but would also be available to convert to a Roth.

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Re: Retirement Savings Bills


@yogibearbull wrote:

@bilperk . Exclusion may be cumulative/overall.


Yes, it might be.  If that is the way it comes out, there will probably be a lot more Roth conversions so you aren't passing on a tax burden.

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Re: Retirement Savings Bills

Section 501 of the proposed SECURE act says $400K applies to "each beneficiary."

My source is the Plan Sponsor website.

Bob 

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Re: Retirement Savings Bills


@Learner wrote:

ElLobo,

Assuming that you have traditional IRA in mind, at least partly, pleae explain what the source of money would be.

If the answer is taxable money, it is already taxed.  With traditional IRA, withdrawals are taxable, at least for most people.

If the answer is another traditional IRA or traditional 403b, 401k, 457, etc.; what is the point?

You may have a good point but help me understand what you are thinking about what he source of money would be.  I might be missing something.

If you mean Roth IRA, let me know.


Yes I specifically mean a Roth and the source of the cash would be pensions and Social Security, both of which are already taxed.  Right now, if I have any excess cash laying around, I can only invest it in a taxable account, since I have no earned income.  I would much prefer to invest that excess cash into a Roth and never pay another penny tax on it!

OTOH, it wouldn't make any sense to allow contributions to a traditional IRA after RMDs kick in! 8-)

ElLobo, de la casa de la toro caca grande
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Re: Retirement Savings Bills

When are these bills scheduled to be signed into law?

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Re: Retirement Savings Bills


@TheWizard wrote:

When are these bills scheduled to be signed into law?

They aren't at this time.  They are just proposals.  They need to be approved in each chamber and then the differences need to be worked out by a Senate/ house committee and you end up with a compromise bill.  Then the bill goes to both houses and they vote.  If they both vote yes, then it goes to the President to sign into law.

A lot can change along the way.


 

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Re: Retirement Savings Bills

As the saying goes, "There's many a slip 'twixt the cup and the lip." :robotlol:

Bob

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Re: Retirement Savings Bills

Last two paragraphs:

"Leaders in both chambers are hopeful that can be accomplished this summer, before Congress takes its annual August recess.

Individual investors should keep an eye on the bill’s progress in the coming weeks. If a final retirement savings bill is approved by Congress, its provisions would become effective on January 1, 2020."

Notice "hopeful" and "if."  It has not been cooked yet.  Sausage making is going on.

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Re: Retirement Savings Bills

         So far I’am pretty sure they’re going to increase the age when RMD’s start, something like 72. They may index that like SS or monkey around with the divisors. It’s all an attempt to make all the inadequate retirement savings accounts last longer. Both parties can claim victory going into an election. The tax reform bill certainly helped poorer retirees. Of course that expires in the future forcing the Dems to renew that part or “raise taxes”.  SOS.

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Re: Retirement Savings Bills


@GLI2019 wrote:

I am happy about the lifetime income disclosure, and I am observing with more than passing interest the status of inherited retirement accounts--especially if "stretch" opportunities are limited or removed.

Bob

 


Thank you for posting this, Dede. I too am GREATLY concerned about Congress changing the stretch for IRA's. This could mean BIG taxes on IRA's left to kids.

I reported on this possibility weeks ago in this forum after a TIAA lawyer warned of coming change possibilities. I even wrote letters to our DC reps. Seems like they had little effect. But I suggest that others follow up with letters expressing your concerns.

I guess my decision in recent years to do much larger IRA -> Roth conversions may not be as foolish as thought. Maybe this and the chance that we may get our IRA inheritances below $400k/kid may be our only way to help the kids.    :-((((((

PS: While Bob deserves much credit for his contributions to this forum, I noted that Dede was actually the OP and corrected my post to reflect that.   :-)))

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Re: Retirement Savings Bills

judger,

I believe Ed Slott (master IRA planner) has remarked that beneficiaries, themselves, have no constituency.  I agree with his observation.

Further, folks like Senator Grassley have commented publicly that eliminating the "stretch" is how the legislation is "paid for."

As I said in a previous exchange on the "old" TIAA site, gifting continues to be an option.  I haven't met a child (certainly none of mine!) who objects to a gift!  :manlol:

Cheers.

Bob

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Re: Retirement Savings Bills

Either Learner or Dede is fine but this reminded me of a song from many years ago...

I'm not Lisa, my name is Julie
Lisa left you years ago
My eyes are not blue
But mine won't leave you
'Til the sunlight has touched your face

Remember the song? Well, in this case, Dede left you days ago, not years ago, and my eyes are blue.

I'm not Dede, my name is Learner

.........

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