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Old 07-10-2019, 10:36 PM
 
7,913 posts, read 5,037,155 times
Reputation: 13571

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Quote:
Originally Posted by ansible90 View Post
That's harsh. Do you have parents? Do you have children?
Exactly. Though this assertion might be lost on some, a major point of retirement-savings isn't the funding of one's own retirement, but to build a dynasty, over the course of generations. Working-class people save, enabling their children to build comfortable lives of considerable savings. The children do likewise, in proportion, for their own children. And so forth, across the generations. Millionaires beget billionaires.

Contrary to popular belief, the principal tension in the tax-code isn't over dispossession of the middle-class or working-class, in favor of the indigent. It's the perpetual struggle between billionaires and mere millionaires. The millionaires want to supplant the billionaires. The billionaires want to keep the millionaires in their place.

Waxing a bit poetic here, and ranging off-topic... revolutions don't happen by peasants revolting. They happen when the gentry and lower-nobility see opportunity to overthrow the upper-nobility. This is what happened in the English revolution, and the French, and the Russian. All of the leading revolutionaries led comfortable, privileged lives. They didn't emerge from the coal-mines shouting slogans about workers uniting. The workers had no say. Those who did have a say, weren't workers. They were aristocrats themselves, albeit junior ones, who wanted more.

It is not coincidental that tax policy tends in particular to penalize the merely affluent, as opposed to the very-rich. And while the current example is not a major matter, and not one that merits vehement agitation or impassioned call-to-arms, it is nevertheless illustrative of a pattern.

Now back to grousing why international stocks keep lagging American ones...
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Old 07-10-2019, 10:59 PM
 
1,664 posts, read 781,380 times
Reputation: 2814
Quote:
Originally Posted by ansible90 View Post
That's harsh. Do you have parents? Do you have children?
Yes to both. I am not counting on inheriting anything from my Mom, who is living off the retirement savings left after my Dad died. My kid has been told not to count on anything from me and his mother.

There's nothing wrong with paying taxes on inherited IRA's. I've argued for decades that inheritance taxes ought to be very different than they are now. Cash outside of tax deferred accounts would be inherited tax free. Cash inside tax deferred accounts would be immediately taxable to the heir. Capital assets would be inherited with a zero basis, and no tax due until they are sold. That protects family businesses, but ensures taxes are paid when the assets are sold.
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Old 07-10-2019, 11:50 PM
 
Location: Tucson/Nogales
17,398 posts, read 21,234,308 times
Reputation: 24216
I've never invested in a 401k, let alone an IRA. When I sought advice from people in my Gambler's Anonymous Group about these programs, years ago, they said: Don't do it! Don't do it! Don't do it!

And I followed their advice!
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Old Yesterday, 04:01 AM
 
Location: Ypsilanti, MI
2,439 posts, read 3,663,507 times
Reputation: 4795
Quote:
Originally Posted by Aredhel View Post
Agree. (1) Annuities aren't growth vehicles, they are for generating a steady income. (2) It makes no sense whatsoever to hold one inside a retirement account, any more than it does to wear a raincoat in the shower. (3) Withdrawing money from a retirement account upon retiring and using it to buy an annuity, on the other hand, can make perfect sense.

(4) Annuities simply don't belong in a retirement account, so why allow them to be sold inside one?
  1. I agree 100% percent with this statement.
  2. There is one logical reason to hold an Annuity within an IRA. That is there will never be any RMD's payable on the amount within that IRA. Per IRS code, all distributions from an IRA which holds only an Annuity are exempt from the 'current' RMD requirements. Move existing IRA funds to an Annuity in that IRA and forget about owing any RMD's on the income generated. However, see my answer to #3 below!
  3. I do not advocate moving your own money into an Annuity because it will not pass to any heirs upon your death. Moving someone else's money, such as the cash out of a DB pension that has future uncertainty, is OK.
  4. This seems contradictory to your item #1 regarding using an Annuity to generate income during retirement. Isn't generating a steady income stream for your retirement years the whole point of building a retirement fund?
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Old Yesterday, 07:43 AM
 
Location: Grove City, Ohio
10,133 posts, read 12,383,606 times
Reputation: 13961
Quote:
Originally Posted by ysr_racer View Post
Sorry, the two biggest changes I see are:

It pushes the RMD out to 72.5 and it forces non spouses that inherit your IRA to withdraw the funds in 10 years.

So if you leave your children a 1 million dollar IRA, instead of taking RMDs, they may have to take $100,000 a year until it's depleted. Thereby paying the taxes sooner.

Unfortunately it also raises the taxes of whoever inherited it.
By not that much.

First thing to remember the parents, let's assume it's the parents for simplicity sake, never paid the taxes on the money so assuming the IRA has $100k in it if the parents did pay taxes the kids wouldn't inherit $100k but $78k if the parents were in a 22% tax bracket.

For most this is much to do about NOTHING which I find disgusting.

Question here. Did I read it correctly that you can contribute even after age 72 if you are still working? Of course, at 72 I have a mandatory withdrawal but if still working can I contribute $7,000 at age 72, 75 and 80? If so this is a good deal for us still working.
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Old Yesterday, 08:50 AM
 
8,021 posts, read 7,300,443 times
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Mainly, it gives people more time before they have to withdraw funds from their IRA, beneficiaries of inherited IRAs have to withdraw all of the funds within 10 years, and more availability of annuities. Most people that are planning to pass on their IRAs are already incorporating Roths into their plans. The article is another one of those where the headline exaggerates the actual meat of the article.
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Old Yesterday, 09:05 AM
 
2,196 posts, read 538,329 times
Reputation: 3795
Quote:
Originally Posted by WRM20 View Post
Personally, I would make the whole balance subject to tax...
Why do you want to collect more tax revenue? For what purpose? We already have estate taxes and inheritance taxes and gift taxes.

https://taxfoundation.org/state-esta...ance-tax-2018/
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Old Yesterday, 09:05 AM
 
Location: VT; previously MD & NJ
2,202 posts, read 1,345,129 times
Reputation: 6336
Quote:
Originally Posted by nicet4 View Post
By not that much.

First thing to remember the parents, let's assume it's the parents for simplicity sake, never paid the taxes on the money so assuming the IRA has $100k in it if the parents did pay taxes the kids wouldn't inherit $100k but $78k if the parents were in a 22% tax bracket.

For most this is much to do about NOTHING which I find disgusting.

Question here. Did I read it correctly that you can contribute even after age 72 if you are still working? Of course, at 72 I have a mandatory withdrawal but if still working can I contribute $7,000 at age 72, 75 and 80? If so this is a good deal for us still working.
What if you have $500,000 left in your IRA? That would be $50,000 a year to the child - on top of his own salary and by that time he is in his highest earning years (hopefully). The taxes would be based on the total of his income plus the IRA payout. Not chicken feed. I don't object to the child paying taxes on the money withdrawn... but requiring it to be depleted within 10 years can cause a real tax burden.

As to continuing to contribute in your later years (if still working), you might be putting in as much as you are required to take out after age 72. What's the point of that? You should put it in a Roth instead so your child doesn't have to withdraw it all in 10 years and pay hefty taxes.
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Old Yesterday, 09:06 AM
 
2,196 posts, read 538,329 times
Reputation: 3795
Quote:
Originally Posted by Aredhel View Post
That may be part of the point. The government wants the deferred taxes owed on that leftover IRA money as quickly as possible. Roth conversions accomplish that.
Part of the point? Part? That's the entire point.
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Old Yesterday, 09:17 AM
 
1,664 posts, read 781,380 times
Reputation: 2814
Quote:
Originally Posted by RationalExpectations View Post
Why do you want to collect more tax revenue? For what purpose? We already have estate taxes and inheritance taxes and gift taxes.

https://taxfoundation.org/state-esta...ance-tax-2018/
The funds in an IRA/401(k) have never been taxed at all, and aren't subject to estate taxes since the heirs have to make RMD's and pay tax at the normal income rate. IRA's were never meant to by multi-generational tax deferral devices.
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