New IRS rules on RMD

[LoboGunLeather]

Now seeing recent articles about newly-adopted IRS rules on Required Minimum Distributions on qualified retirement accounts (IRA, 401, etc). Not much detail so far but this appears to apply largely to beneficiaries and inherited accounts, and reporters are saying there are now up to 3 different RMD computation formulas.

Probably worth looking into before tax time rolls around again for those of us facing RMD issues, especially if your holdings include inherited funds.

 

[Huskerguy]

I am not tax expert, shoot, I am not an expert at anything!

The RMD changed to age 73 when you are required to start taking money out and pay taxes on it.

Some things you can start earlier are to convert to Roths or put money in a Charitable account and name charities. You have to pay taxes on the money you withdraw to put into Roths but there is no tax after that. All sorts of variables on this so consult an expert.

Another option at 70.5 is you can move money to a charitable trust and have money donated to designated and qualified non profits.

No matter what, the government is going to get their/your money. Make sure your advisor shows you all of the tables for potential liability, it can be overwhelming.

And it you decide to NOT convert, yes, whoever inherits the IRA funds will be required to pay taxes on them as I understand it. Luckily, I and my wife are both still alive!

 

[ladder13]

^^^^^

A good estate/tax lawyer can guide you through tax planning and inheritance pitfalls….if you care that your heirs get to keep most of what you leave them to their advantage.
Most likely they will never know what you did for them, not you.

 

[Mike SC Hunter]

I am not tax expert, shoot, I am not an expert at anything!

The RMD changed to age 73 when you are required to start taking money out and pay taxes on it.

Some things you can start earlier are to convert to Roths or put money in a Charitable account and name charities. You have to pay taxes on the money you withdraw to put into Roths but there is no tax after that. All sorts of variables on this so consult an expert.

Another option at 70.5 is you can move money to a charitable trust and have money donated to designated and qualified non profits.

No matter what, the government is going to get their money. Make sure your advisor shows you all of the tables for potential liability, it can be overwhelming.

And it you decide to NOT convert, yes, whoever inherits the IRA funds will be required to pay taxes on them as I understand it. Luckily, I and my wife are both still alive!

"the gov. is going to get their money"........Wrong
The gov. is going to get YOUR money.............

 

[BigBoy99]

I'm glad I spent the last 12 years slowly converting my Traditional IRA to a Roth IRA. Last year was last time I received an RMD from the Traditional IRA. By starting the conversion when I did, I figured I'd avoid paying at a higher tax rate when the Traditional IRA had to be withdrawn.

 

[Huskerguy]

"the gov. is going to get their money"........Wrong
The gov. is going to get YOUR money.............

Thank you for pointing me to the errors of my way! I have changed the post. ha

 

[Kinman]

I don't complain about paying taxes anymore, I got hit pretty hard on my RMD this year but what that meant to me was that my slush fund 401 has been doing great.

 

[HOUSTON RICK]

Mrs. Houston's demands are such that RMDs are not an issue.

 

[Beemer-mark]

IRS rules change with the wind.

 

[BC38]

I don't complain about paying taxes anymore, I got hit pretty hard on my RMD this year but what that meant to me was that my slush fund 401 has been doing great.

I haven't quite got to the point of not complaining about taxes - yet.
It still seems like the .gov is intent on taxing productive members of our society to DEATH - and even beyond death.

BUT, I am still thankful to have such a first world problem. It is a blessing to have accumulated enough wealth that I have to even concern myself with how to shelter it from excessive taxation...

 

[Golddollar]

Mrs. Houston's demands are such that RMDs are not an issue.

Same with my cheap former employers.

 

[DWalt]

I and wife have always used our traditional IRAs only for charitable donations. If the full annual RMD is transmitted directly by the IRA custodian to a qualified charitable organization, then it automatically becomes an untaxed RMD. Long ago I converted most of our traditional IRAs to Roth IRAs. At least in my circumstances, a traditional IRA is not such a good deal.

 

[CalifEd]

The RMD are almost child's play compared to IRA/Roth/401 distributions inside a trust after you leave this world.
I spent an hour yesterday with both my advisor and trust attorney discussing this. I should have added a CPA with trust distribution experience. My head is still spinning.
So much depends on how you set the trust up, asset ownership, Trustee Instructions and the hope, dreams, wants, and desires of the beneficiaries. Also, the best laid plans of mice and men often get trashed by the ever changing IRS rules.

 

[DWalt]

The RMD are almost child's play compared to IRA/Roth/401 distributions inside a trust after you leave this world.
I spent an hour yesterday with both my advisor and trust attorney discussing this. I should have added a CPA with trust distribution experience. My head is still spinning.
So much depends on how you set the trust up, asset ownership, Trustee Instructions and the hope, dreams, wants, and desires of the beneficiaries. Also, the best laid plans of mice and men often get trashed by the ever changing IRS rules.

As you have already learned, an IRA must NEVER be included in a trust. How did that happen? It can create horrendous tax complications and consequences. We have a revocable trust, but did not include all our assets in it, most notably excluding our IRAs, real estate, vehicles, several smaller joint survivorship brokerage accounts and bank accounts. Any asset you can legally and easily pass to survivors outside the trust (such as real estate by using a TODD) does not belong in it.

 

[Magnum_PI]

The IRS... another 3 letter agency on a long list that needs to be dissolved...