topic Re: Required Minimum Distirbutions and CV in Community Chat

Required Minimum Distirbutions and CV

kitty60 — Tue, 17 Mar 2020 18:15:33 GMT

I have a concern with the impact of CV on the required minimum distribtuions that must be taken from IRA's for seniors who have reached a certain age. I have yet to hear of any relief as many may need to sell securities to meet this distribution. I do think the RMD's should be waived for this year and have contacted my congress person. Not all seniors need this money for daily expenses and would prefer to sell into a better market.

Relief is being considered for workers and I think the same needs to be done for seniors.

Re: Required Minimum Distirbutions and CV

Loves Purple — Tue, 17 Mar 2020 18:28:30 GMT

I’m 70 1/2 but the RMD rules changed this year and the new mandatory withdrawal age is 72. That was a relief to me. I hate being told I have to withdraw my savings, how much and pay taxes on it when I don’t want to.

Re: Required Minimum Distirbutions and CV

tobes — Tue, 17 Mar 2020 18:40:54 GMT

@kitty60 I am not sure what you mean by selling securities. I know you can take the RMD and purchase interest free municipal bonds to augument your living expenses.

Re: Required Minimum Distirbutions and CV

kaydee50 — Tue, 17 Mar 2020 19:32:06 GMT

@tobes If you are required to withdraw a certain amount to meet the RMD and the account is all in stocks and bonds--no cash--then you would be forced to sell in a market that is down 30%. And since the amount that needs to be withdrawn in 2020 is based on the value of the account as of December 31, 2019, the original poster makes a good point.

Re: Required Minimum Distirbutions and CV

meem120 — Tue, 17 Mar 2020 19:41:27 GMT

Yes, I received a letter yesterday that the age was changed to I believe 72

Re: Required Minimum Distirbutions and CV

novamc1 — Tue, 17 Mar 2020 20:02:26 GMT

As far as I'm concerned, the OP makes an EXCELLENT point about a situation that really gets my dander up whenever I think about it.

Whatever amount we have to withdraw and pay out in taxes, the less remains in the account to perhaps "come back" by growing in the future. This creates double-whammy loss both ways as long as the stock market is down.

It's a real lesson in the value of having a highly diversified portfolio.

Re: Required Minimum Distirbutions and CV

Highlands72 — Tue, 17 Mar 2020 20:07:46 GMT

RMD change to age 72 applies ONLY to those who had not yet reached age 70-1/2 by the end of 2019.

If you are age 71, for example, you are required to continue under the old rules.

Re: Required Minimum Distirbutions and CV

BirkiLady — Tue, 17 Mar 2020 20:26:45 GMT

Frankly, I dislike having the government require me to take distributions! At 72, I've been taking them for several years, paying taxes on that money and simply reinvesting it. I don't need it to live on and wish it could stay where it was . . . left untouched and without being taxed. Now, I'm paying double (or far more) taxes on money I prefer to leave to next generations.

Re: Required Minimum Distirbutions and CV

Highlands72 — Tue, 17 Mar 2020 20:33:01 GMT

@BirkiLady wrote:
Frankly, I dislike having the government require me to take distributions! At 72, I've been taking them for several years, paying taxes on that money and simply reinvesting it. I don't need it to live on and wish it could stay where it was . . . left untouched and without being taxed. Now, I'm paying double (or far more) taxes on money I prefer to leave to next generations.

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The SECURE (yes, that is an acronym) Act also made what I consider very unfavorable changes to the non-spouse beneficiary regulations.

Re: Required Minimum Distirbutions and CV

Highlands72 — Tue, 17 Mar 2020 20:35:00 GMT

@meem120 wrote:
Yes, I received a letter yesterday that the age was changed to I believe 72

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For persons born on or after July 1, 1949.

Re: Required Minimum Distirbutions and CV

catmama — Tue, 17 Mar 2020 21:07:26 GMT

In 2009 they waived the RMD requirement so they might do it again this year. Doesn't help people who have already taken theirs this year

Re: Required Minimum Distirbutions and CV

jlkz — Tue, 17 Mar 2020 21:37:37 GMT

RMD's: You do not have to sell the stocks in your IRA. You can transfer them out to another account with the same broker. You do have to pay tax though....we use the cash dividends for that purpose. The transferred stocks continue to grow or we will sell them when they bring in a better price.

Check with your broker. We have done this transfer and tax payment from dividends for several years.

Re: Required Minimum Distirbutions and CV

novamc1 — Tue, 17 Mar 2020 21:43:14 GMT

@BirkiLady

As for leaving IRA money to future generations, I'm not sure that's doing them much of a favor.

New rules require those who inherit retirement funds to take out and pay tax on the money during a specified period, instead of spacing out their withdrawals over their projected lifetimes, as the old rules allowed. This could send them into a higher tax bracket fairly easily.

(Someone more knowledgeable might contradict me if I'm wrong about this.)

I can accept the fact that the IRS wants to get the deferred taxes owed on money that we put into retirement funds, but to stick my kids with a shortened withdrawal period doesn't seem very nice to me.

But since when are IRS rules "nice" to people?

Re: Required Minimum Distirbutions and CV

Highlands72 — Tue, 17 Mar 2020 21:58:21 GMT

@novamc1 wrote:
@BirkiLady

As for leaving IRA money to future generations, I'm not sure that's doing them much of a favor.

New rules require those who inherit retirement funds to take out and pay tax on the money during a specified period, instead of spacing out their withdrawals over their projected lifetimes, as the old rules allowed. This could send them into a higher tax bracket fairly easily.

(Someone more knowledgeable might contradict me if I'm wrong about this.)

I can accept the fact that the IRS wants to get the deferred taxes owed on money that we put into retirement funds, but to stick my kids with a shortened withdrawal period doesn't seem very nice to me.

But since when are IRS rules "nice" to people?

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This is true. In most cases, the beneficiaries (children) of the deceased will be in their highest earnings (and highest tax bracket) years, generally in their 50s or 60s.

The children of these beneficiaries will generally be young adults, and therefore no longer tax deductions.

The government has figured out a way to get the maximum tax benefit from the savings of retired people.

--edited to add: these are generalities, and certainly not applicable to every case.

Re: Required Minimum Distirbutions and CV

BirkiLady — Wed, 18 Mar 2020 00:02:55 GMT

@Highlands72 @novamc1 I'm concerned about future generations; not my son or even grandson.

Have huge concerns about a niece in her 30's and a job which she loves, but is unstable. She may need a lot of financial help in her future. I'd rather she have the money than the government insist I take a "minimum" amount of several accounts each year which are reinvested again. I don't need it or want it at this point in my life.

At some point, I may need it if in Skilled Care. IDK; no one knows what that will cost when we'll need that kind of help. It was around $15,000/month when my mom was in Skilled Care. She passed away in 2017.

Edited: My legal documents are up-to-date; my son, DIL and grandson are well covered; although as mentioned above, they don't need the additional income or taxes incurred with my death. However, it happens when parents pass away to most of us; we pay additional taxes.

The above is simply my opinion about government laws!

Re: Required Minimum Distirbutions and CV

granddi — Wed, 18 Mar 2020 00:04:43 GMT

@jlkz wrote:
RMD's: You do not have to sell the stocks in your IRA. You can transfer them out to another account with the same broker. You do have to pay tax though....we use the cash dividends for that purpose. The transferred stocks continue to grow or we will sell them when they bring in a better price.

Check with your broker. We have done this transfer and tax payment from dividends for several years.

You do not have to sell the stock and yes you can transfer the stock to another account BUT you do have to pay taxes on the amount that you are transfering as your calculated RMD. You pay taxes on the RMD it doesn't matter where the money goes or in what form (cash stock etc)