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Old 02-05-2018, 01:03 AM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,707 posts, read 40,113,239 times
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Mandatory Withdrawals - What to do with the money if you don't need it?

Personal choice!

I gave mine away while still in my 40's (DAF and Family / foundation) not wealthy... (I think I was making < $30k / yr in my 40's), Just felt it was more important to put it to perpetual 'gifting' than to burn on my self / family.

Should I have any RMD's (unlikely)... I will be targeting that to DAF / Family foundation LONG before age 70.5

As previously mentioned... PLANNING is a normal process (before and during retirement / EVERY yr for taxes (BEFORE that obligation arrives), so RMD's should be no 'surprise' (unless a windfall...unlikely).

I set my kids up with Roth's at age 12, so you can do the same for your grandkids / neighbor kids... Many, MANY great ways to INVEST your RMDs! (in others)
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Old 02-05-2018, 01:37 AM
 
72,085 posts, read 72,094,203 times
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Quote:
Originally Posted by craigiri View Post
It's not that I want to pay more, it's actually being conservative.

Many years back when Apple Computer started having a vast cash hoard, all the other corporations and business experts said they were foolish. Michael Dell said they should just close the corporation and return any money left to the shareholders (he thought they had completely failed).

But, lo and behold, those vast sums have allowed the company to weather Recessions that drove other companies out of business. Maybe those other companies were "smart" and borrowed money at low rates instead of saving up their own cash hoards to finance themselves.

Many of the "tax moves" that people talk about are simply games - depending on circumstances they might work out or they might not.

My "sin of paying too much in taxes" is simply not plotting to try to beat the system. This is akin to those who think they can beat the stock market or beat the casino or beat anything else.

IMHO, the proof ends up in the pudding. We have no debt, 3 houses and no financial worries....and that was with a high school education.

While I disagree with MANY of the ways the government spends money, I still know that money spent and money earned (or collected) must someday balance. So I take the Warren Buffett approach to these things...taxes are the price of civilization both now and in the future.

Unfortunately, I have had bad experiences working for non-profits (as a volunteer) and seeing how much of the money was spent....this soured me on most charity. I'm not religious do giving it to the Priest (who may also do bad things with it) is not an option.

I won't have to worry about inheritance taxes....I'm not that well off. So basically I just pay whatever taxes are due. Honestly, the fees from my accountant upset me more than those from the government because a simplified system would save me a couple grand a year.

Back when I ran a couple businesses at one time I did get a bit upset because, of course, the income from a 2nd business is on top of regular income and therefore often taxed at the very highest rates. I solved that one easily - I sold the 2nd business. Turned out I ended up making about the same $$$ with less work.

Again, it's not that I try to pay the government extra, just that TIME is the most valuable asset we all own so you won't see me saving up every $10. receipt for a box of nails so that I can deduct it from the house basis cost in 15 years when and if I sell.

I think I pay just the right amount. I don't know about the rest of you, but I had 3 children go through public school. Taxes pay for that. Anyone who runs around praising the military or "our way of life" and yet is satisfied that we now have 21.5 Trillion dollars in debt due to "tax savings" would seem hypocritical to me. As my wife know, when it comes to these types of matters I'm a rule follower. I don't butt in line, try to get special advantages and I pay all taxes due. This give me the right to be an American citizen in good standing.
taking advantage of the tools and laws put in place to allow you to keep more of what is ALREADY YOURS is hardly working the system . some people are just better educated at keeping what they earned than others
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Old 02-05-2018, 08:11 AM
 
15,561 posts, read 4,110,381 times
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Quote:
Originally Posted by mathjak107 View Post
taking advantage of the tools and laws put in place to allow you to keep more of what is ALREADY YOURS is hardly working the system . some people are just better educated at keeping what they earned than others
You definitely don't understand informed decision.

For example, one of my businesses is photography. I have 3 houses and spend 1/3 of the year at each. So I inquired with my accountant as to whether I can deduct office and travel expenses in the other houses since I do make income from pictures taken.

He said sure. All I had to do was to produce all the paperwork and also file tax returns in both of the other two states! Knowing the cost of accounting, at least 50% of any savings (maybe more) would have been eaten up in keeping what was ALREADY MINE. Plus, I would have had to expend a lot of time and energy to doc the expenses.

Lastly, I would then be on the tax rolls of three states - just what I look forward to in my retirement! As anyone with experience knows, mistakes are occasionally made and it can take months or even years to straighten out accounting with some of these state agencies.

It's an educated decision - not a failure to know the rules. If you want to pick dimes out of urinals, you have that right and you will have more money than you had before. I you want to take a metal detector and walk the beach the same will occur.

The only real question is whether it is worthwhile to you. When the accountant told me I'd have to file 3 state returns I declined. It's just not worth the trade-off.

The same goes for other "legal" methods. I could buy houses, rent them out, depreciate them.....fix them up and deduct it all. But I don't want to.

I think it's more a question of lifestyle. To me the ultimate luxury is owning no rental properties and therefore never receiving a phone call about a problem. To someone else, this may be their reason for living....working the levers and gears of real estate investment. My father was/is this way, owned many properties and hardly paid any taxes due to it. Good for him.
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Old 02-05-2018, 08:18 AM
 
72,085 posts, read 72,094,203 times
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don't tell me i don't understand informed decisions . like i said if you someone is legally entitled to reduce what they give back they are entitled to do it if they choose and it is not working the system , it is keeping what is legally yours . . i really don't care what you do
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Old 02-05-2018, 09:14 AM
 
933 posts, read 834,549 times
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Quote:
Originally Posted by craigiri View Post
Which is why our trains are crashing, our bridges falling, our deficit is rising, etc.......

On the other hand, it's a fact that "free money" to kids and grandkids can often actually hurt them. Sure, there is a fine line...and it depends on the mindset of your family members. I could give mine each a million and their outlook on life and lifestyles wouldn't change much.
I posted a question similar to the OP's a while back -- I was trying to figure out whether QLACs made any sense in reducing the tax profile on RMDs. After reading and article recommended by Mathjak (thanks Jak!) and talking with my CFP, I concluded that the QLAC was a poor investment, and that I'm better off just taking the tax bite and investing any unused RMD $ in tax-managed mutual funds.

The answers to the OP's question will largely depend on each person's circumstances. It's here that I kinda disagree with you, Craigiri: my children don't have the access to decent-paying, secure employment that we boomers enjoyed. They are good smart kids, but almost certainly will never have a pension, employer-sponsored health insurance, and quite possibly won't get social security or access to a 401(k) either, since it seems to be pretty tough to get anything but temporary or contract work. That's why I wanted to reduce the tax bite on my RMDs: so I could leave them enough to get by on when they get older.

Yes, the infrastructure is in appalling shape, but it isn't because we in the middle class aren't paying "our fair share," it's because uber-wealthy individuals and multinational corporations are rewriting the tax laws to benefit themselves. They don't give a damn that the freeways are congested or the bridges are falling down or the trains keep crashing. You don't need any of those things when your corporate headquarters is in Dubai or you own private islands and shuttle between them in your fleet of yachts and private jets. Under "tax reform" these guys get to give multiple BILLIONS of $ in "free money" to their heirs, and I'm supposed to feel bad that I want my kids to have a couple hundred thousand when I die because they may not have Medicare when they hit 65?

Ok, rant off.
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Old 02-05-2018, 09:27 AM
 
661 posts, read 327,154 times
Reputation: 1974
Quote:
Originally Posted by mathjak107 View Post
no , that is where planning comes in .

using just standard deductions a couple can take up to 24k or so out of their retirement money at a min while delaying ss and letting that grow and have zero tax . they can pull more than 40k at about 4.50% tax rate .

they can utilize the zero% capital gains brackets to provide tens of thousands in income tax free , throw in some roth money and under 25k in ss and some cash you set a side and you can have a 100k plus income with very little tax . .

so it is possible using roths to have ss untaxed . there are lots of tax strategies out there. the problem is most have to be put in place starting young only we don't know what we don't know so we plan wrong . self included .
If you were 59 1/2 , single, and could live with the income limitation of the new 12% tax bracket:

Does this mean you could have income up to the tax bracket limit (around 37K) in addition using 12K worth of Trad IRA money to convert to a Roth?

Al the comments here seem geared to couples, please help me understand. All my IRAs are taxable.
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Old 02-05-2018, 10:14 AM
 
Location: Nebraska
4,235 posts, read 7,281,591 times
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Quote:
Originally Posted by blktoptrvl View Post
If you reach the age of mandatory withdrawals (70?) from your IRA and Roth, you you don't actually need that money because you are just living on saving accounts, what do you do with that cash?

Do you just shift to a regular savings accounts, or is there some other kind of sheltered account you can send it to? Or is this when you starting giving a lot of money away?
I spend all of my EXTRA money on WILD WOMEN, FAST/SLOW HORSES and MORE WHISKEY.. However at 71 years I don't get the urges that often.
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Old 02-05-2018, 10:48 AM
 
Location: Philadelphia/South Jersey area
2,886 posts, read 1,416,614 times
Reputation: 10129
Quote:
Originally Posted by charlygal View Post
Even if one is financially comfortable, I always find it odd that people don't know what to do with available discretionary income. So much so that one has to inquire of strangers on the internet. Isn't planning for RMD a part of normal retirement planning? Personal projects, charities, funding social programs, helping the poor, endowing scholarships, helping a viable start up, etc.

OP, I'm not trying to talk negatively about you. I just find it odd that in today's world, people blessed to have money are not plugged into general "need" of the world around them.
YOU and me both.

Hey guys send it to me. I'll spend it responsibly.
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Old 02-05-2018, 10:49 AM
 
Location: Philadelphia/South Jersey area
2,886 posts, read 1,416,614 times
Reputation: 10129
Quote:
Originally Posted by Gunluvver2 View Post
I spend all of my EXTRA money on WILD WOMEN, FAST/SLOW HORSES and MORE WHISKEY.. However at 71 years I don't get the urges that often.
Hey Gunluvver, where are all the "wild" men. I want them. it's always the wild women. DISCRIMINATION. I want my fair share of wild men.

ignore me, the Eagles won the super bowl. I'm sleep deprived
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Old 02-05-2018, 11:28 AM
 
Location: Mt. Lebanon
1,844 posts, read 1,951,792 times
Reputation: 1899
Jesus, I am not 70 yet but Id like to have that problem. If I were you I'd buy a house and rent it out through airbnb and have it managed by someone else. And/or I'd spurge. I'd travel the world! After all life is short.

Give it to charity.Make someone's life better if you really don't need that money.
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