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Frequent Contributor

Re: Retirement Savings Bills

The House version of the SECURE Act has passed--417-3.

https://finance.yahoo.com/news/house-passes-bill-help-workers-154644911.html

Bob

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Re: Retirement Savings Bills


@GLI2019 wrote:

The House version of the SECURE Act has passed--417-3.

https://finance.yahoo.com/news/house-passes-bill-help-workers-154644911.html

Bob


Now we will see what the Senate does with this.

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Re: Retirement Savings Bills

I see that TIAA, not surprisingly, has commended the House passage of the SECURE bill.

https://www.tiaa.org/public/about-tiaa/news-press/press-releases/pressrelease755.html

The lifetime income provision plays right into TIAA's wheelhouse.

Bob

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Re: Retirement Savings Bills

house passed the retirement legislation yesterday. It’s Easy to pass legislation in the House because the majority party controls the agenda and speaker only schedules a vote if there are enough votes to pass.

Senate operates under different rules where a small group or minority party can stall a vote indefinitely. An organization with clout such as the AARP could force senate to extend the distribution period to 20 years or grandfather existing IRAs in return for getting its approval of the pension changes.

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Re: Retirement Savings Bills

With respect to the AARP position, its support is unambiguous:

"In an op-ed for Fortune magazine after the SECURE Act passed in the House, AARP CEO Jo Ann Jenkins encouraged the Senate to take action on the retirement legislation.

"The gaps in America's retirement savings system undermine our nation's financial security, increase the risk of poverty among our retirees, and strain our social safety net,” Jenkins said in the op-ed, coauthored by Roger W. Ferguson, chief executive of the financial services company TIAA and former vice chairman of the Federal Reserve. “As a record number of Boomers retire each day, we urge the Senate to take up the House legislation swiftly and the Trump administration to sign it into law. In doing so, they can embrace a rare bipartisan opportunity to help improve the retirement of many Americans, so they experience no tragedy in growing old, but well-being earned after decades of hard work and savings."

Bob

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Re: Retirement Savings Bills

Bob posted the Yahoo link.  Here is the CNBC link:

https://www.cnbc.com/amp/2019/05/24/what-the-secure-act-would-mean-for-you.html

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Re: Retirement Savings Bills

Neato.

I'm planning to start monthly RMDs next January under current law. So if they can get this signed into law soon, I will be able to delay RMDs until January, 2022 and continue with modest Roth conversions for two more years.

I'll be starting age 70 SS next year regardless, so I'll need to adjust my income projection spreadsheet to figure those last two years of conversions, with an eye on the next IRMAA threshold, which is supposed to start CPI-adjusting soon...

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Re: Retirement Savings Bills


@TheWizard wrote:

Neato.

I'm planning to start monthly RMDs next January under current law. So if they can get this signed into law soon, I will be able to delay RMDs until January, 2022 and continue with modest Roth conversions for two more years.

I'll be starting age 70 SS next year regardless, so I'll need to adjust my income projection spreadsheet to figure those last two years of conversions, with an eye on the next IRMAA threshold, which is supposed to start CPI-adjusting soon...


You can convert even if you are taking RMDs.  The conversions don't count towards RMDs, however!  Also, I assume you pay taxes on conversions from non-conversion money.  That is, ifn you convert $10,000, with, say, $2000 tax due, you move all $10,000 to your Roth and pay the $2000 tax from other income.  That's the only thing that makes sense.

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


@ElLobo wrote:

@TheWizard wrote:

Neato.

I'm planning to start monthly RMDs next January under current law. So if they can get this signed into law soon, I will be able to delay RMDs until January, 2022 and continue with modest Roth conversions for two more years.

I'll be starting age 70 SS next year regardless, so I'll need to adjust my income projection spreadsheet to figure those last two years of conversions, with an eye on the next IRMAA threshold, which is supposed to start CPI-adjusting soon...


You can convert even if you are taking RMDs.  The conversions don't count towards RMDs, however!  Also, I assume you pay taxes on conversions from non-conversion money.  That is, ifn you convert $10,000, with, say, $2000 tax due, you move all $10,000 to your Roth and pay the $2000 tax from other income.  That's the only thing that makes sense.


Just thinking - If you are over 59.5 years of age you can withdraw the $2k from the Roth to pay the taxes. 

Capital
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Re: Retirement Savings Bills

El Lobo is correct that you can do Roth conversions after you finish your RMD each year. But in my case, as a single person, there's not much point in doing it after RMDs start. 

For past few years I've been doing modest Roth conversions of $35k or so to get my AGI up close to where it'll be at age 70+, and I'm ok with that.

As for that old rule of thumb of paying Roth conversion taxes from your taxable account, that just depends. I have three sources of income hitting my checking account each month: TIAA lifetime annuity income (from tax-deferred); monthly withdrawals from remaining unannuitized tax-deferred account; divorced spouse SS income. And some of this income has accumulated in my taxable investment account.

So where is the money coming from to pay Roth conversion taxes? Perhaps it's coming strictly from my SS benefit. Or perhaps money is fungible and we don't really care once it's in my checking account...

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