topic Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION in Community Chat

CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

jlkz — Wed, 28 Dec 2016 00:59:25 GMT

If you have an IRA and are 70.5 years old, you only have a day or two to take your required minimum distribution or be penalized. I filled the paperwork out last month but put it aside to check on more current stock prices...my broker was good enough to call me today. Don't forget.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Annabellethecat66 — Wed, 28 Dec 2016 01:13:38 GMT

My financial advisor told me this summer I'd soon have to start taking out money from the IRA. I think it stinks. I don't need it and I'd just as soon leave it there.

I think we should be able to do what we want with OUR money. I don't understand all of it, just do what he and my daughter says. Just one more way you have to pay taxes on it, as I understand it.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

KathyPet — Wed, 28 Dec 2016 01:19:27 GMT

I paid a visit to my broker today and took a rather large withdrawal. I am 68 and don't have to do a withdrawal yet but my DH died in Feb so this is the last year I can file as married. better to take advantage of the Lower tax rate for those filing married.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Evie2004 — Wed, 28 Dec 2016 02:59:19 GMT

Not meaning to stir the pot, but regarding the MRD of an IRS, my husband turns 70& 1/2 next month, per our financial planner, he has to make his minimal required distribution by the end of 2017. We are planning on taking it as a quarterly payment, starting in April. We have been discussing this distribution with our planner this past year & trust him implicitly.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Evie2004 — Wed, 28 Dec 2016 03:02:59 GMT

@Annabellethecat66, yes unfortunately we do have to pay federal & state taxes on it..but we are in a lower tax bracket now than we were when we put it in there.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Evie2004 — Wed, 28 Dec 2016 03:08:31 GMT

Oops, meant IRA in my earlier post

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Venezia — Wed, 28 Dec 2016 03:06:13 GMT

@Annabellethecat66 wrote:
My financial advisor told me this summer I'd soon have to start taking out money from the IRA. I think it stinks. I don't need it and I'd just as soon leave it there.

I think we should be able to do what we want with OUR money. I don't understand all of it, just do what he and my daughter says. Just one more way you have to pay taxes on it, as I understand it.

If you are paying tax on the withdrawal amount, it means you didn't pay tax on the money before it was added to the IRA. You either pay before or after (deferred tax), depending on the type of IRA. It's not a case of being taxed twice.

You can invest the withdrawn amount in other ways, if you don't need it, which I'm sure your financial advisor will be happy to explain to you.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Annabellethecat66 — Wed, 28 Dec 2016 03:08:36 GMT

@Evie2004 I know but I'd just as soon leave it alone. Because I have to take it out and then reinvest it it's going to cost me money all around. I'd be happy just leaving it alone.

I also say it's like a joke because you save money and don't go crazy spending it and then you get old(er) and it's more difficult to go on trips, etc. My son-in-law's parents have taken 3 (on their 4th middle of January) cruises around the world...They'll be gone from January until the end of April.

I like to hear about people enjoying their money. Why not?

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Evie2004 — Wed, 28 Dec 2016 03:27:40 GMT

@Annabellethecat66, feel the same as you do about the distribution,we need to figure out something (really) fun to do with it next year, we do plan to gift our 2 married sons some of it, as they can really both use a little extra now. It is still hard to spend the money you saved all those years! But hopefully we will enjoy figuring it out!

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Highlands72 — Wed, 28 Dec 2016 03:38:02 GMT

@Evie2004 wrote:
@Annabellethecat66, yes unfortunately we do have to pay federal & state taxes on it..but we are in a lower tax bracket now than we were when we put it in there.

There are also cases where seniors are not in a lower tax bracket when they reach RMD age.

Those who had a husband and several children while in the contributing years may now be filing as a single taxpayer at a higher rate.

In addition, someone who made investments into a personal account over the years (as opposed to investing that same dollar amount in an IRA) would not be subject to paying tax on capital gains, or might be taxed at the much-reduced capital-gains rate for higher income brackets. In an IRA, all withdrawals are taxed, including the accumulated gains.

Not all eventualities can be planned for years in advance; when you invest for the future, things may not turn out as you predicted.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Dawnie — Wed, 28 Dec 2016 04:04:41 GMT

Traditional IRA's must Be drawn down starting at 70.5 yo. Roth IRA's are not required to be distributed. Some folks convert traditional (paying taxes due) to Roth.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

151949 — Wed, 28 Dec 2016 04:18:31 GMT

@Annabellethecat66 wrote:
My financial advisor told me this summer I'd soon have to start taking out money from the IRA. I think it stinks. I don't need it and I'd just as soon leave it there.

I think we should be able to do what we want with OUR money. I don't understand all of it, just do what he and my daughter says. Just one more way you have to pay taxes on it, as I understand it.

Money put into an IRA is put in pre tax - the government now wants you to take the distribution and pay the taxes so they make it mandatory. Simple.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

MarieIG — Wed, 28 Dec 2016 04:36:13 GMT

@151949 wrote:
@Annabellethecat66 wrote:
My financial advisor told me this summer I'd soon have to start taking out money from the IRA. I think it stinks. I don't need it and I'd just as soon leave it there.

I think we should be able to do what we want with OUR money. I don't understand all of it, just do what he and my daughter says. Just one more way you have to pay taxes on it, as I understand it.
Money put into an IRA is put in pre tax - the government now wants you to take the distribution and pay the taxes so they make it mandatory. Simple.

No, not every qualifies to put money in a traditional IRA pre-tax, (see, non-deductible IRA). But yes, they do require the distributions on the traditional IRAs.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

libbyannE — Wed, 28 Dec 2016 04:42:01 GMT

@Annabellethecat66 wrote:
My financial advisor told me this summer I'd soon have to start taking out money from the IRA. I think it stinks. I don't need it and I'd just as soon leave it there.

I think we should be able to do what we want with OUR money. I don't understand all of it, just do what he and my daughter says. Just one more way you have to pay taxes on it, as I understand it.

I agree. We aren't old enough for the required distribution, but looking ahead at tax burdens, our cpa recommends cashing in various things each year. Then what?! You work hard to save for retirement, but the taxes take so much of it. It is disheartening.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

KathyPet — Wed, 28 Dec 2016 05:49:24 GMT

YOu don't have to actually keep and spend the net proceeds of the withdrawal. THe IRS doesn't care what you do with the money. THey just want their taxes on it. DO the withdrawal, send Uncle Sam their portion and reinvest the rest back into the non IRA portion of your investment portfolio and start it growing (hopefully) again in the stock market.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

DiAnne — Wed, 28 Dec 2016 05:57:08 GMT

Mine just goes to pay my extremely high property taxes.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

KathyPet — Wed, 28 Dec 2016 08:18:10 GMT

FOr most people you put money in a IRA when you were working. YOu then sheltered that income from a tax bite when you put it into your IRA and thus lowered your taxable income for the years you contributed to your IRA. MOst people are in a higher tax bracket when they are working and sheltering that money helps reduce those taxes. When you retire most people are earning less and are in a lower tax bracket. UNcle Sam wants their taxes on that money you put away tax free. BY withdrawing it after retirement you will normally pay less taxes on it at that time then you would have had you not sheltered it. I fail to see what the complaints are about. Surely people understand that there were no taxes paid on that money when it was invested in the IRA and Uncle Sam has now come calling.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

Perkup — Wed, 28 Dec 2016 13:43:34 GMT

@jlkz wrote:
If you have an IRA and are 70.5 years old, you only have a day or two to take your required minimum distribution or be penalized. I filled the paperwork out last month but put it aside to check on more current stock prices...my broker was good enough to call me today. Don't forget.

You can file paperwork that releases your minimal distribution at the same date each year, and relieve your issue of remembering. Mine comes in right on schedule every year and I never have to give it another thought.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

millieshops — Wed, 28 Dec 2016 14:06:47 GMT

@Annabellethecat66All the IRA money is not yours - you never paid taxes on it and now the bill is due. you owe taxes to the other taxpayers. I don't like paying taxes any more than anyone else, but if you have enough money not to need your IRA money, you're already far richer than most of this country. One of my personal beliefs is that the rich and the strong have responsibilities to those who are neither.

We don't have to actually use all the money - pay the taxes and invest the dollars you don't need or don't want to donate to a charity you support.

In the long run, your heirs might well get more because they won't have to pay the taxes on the money you leave to them as they would when they inherit deferred-tax dollars.

Re: CLOSE TO DEADLINE FOR IRA REQD. MINIMUM DISTRIBUTION

KathyPet — Wed, 28 Dec 2016 14:28:10 GMT

@millieshops wrote:
@Annabellethecat66All the IRA money is not yours - you never paid taxes on it and now the bill is due. you owe taxes to the other taxpayers. I don't like paying taxes any more than anyone else, but if you have enough money not to need your IRA money, you're already far richer than most of this country. One of my personal beliefs is that the rich and the strong have responsibilities to those who are neither.

We don't have to actually use all the money - pay the taxes and invest the dollars you don't need or don't want to donate to a charity you support.

In the long run, your heirs might well get more because they won't have to pay the taxes on the money you leave to them as they would when they inherit deferred-tax dollars.

YEs I forgot about the inheritance rules. WHile the IRS allows a deceased spouse's IRA to be transferred to a surviving spouse that option is not available to children of those taxpayers with IRA's . WHen a child inherits a IRA from a parent there is no deferral period. THe entire IRA must be distributed in the year it is inherited and thus added to that child's taxable income. THat could create a very large tax,liability for that child when that distribution is added to a child's other income for the year.

As far as having to take a withdrawal once you are filing as a single taxpayer after a spouse is deceased you can get around that by doing as I am doing this year. IF your spouse died during the year you can file as married filing jointly that year and have a higher income limit in a lower tax bracket then a single person. SO even though I am not required to do a withdrawal yet I am taking a large chunk withdrawal so I can take advantage of the married filing jointly status.