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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!
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.
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?
Unless the retiree has substantial funds outside the IRA that he can call upon in case of unexpected financial need, or the IRA is very small, annuitizing the entire IRA is probably a mistake. Better to have the flexibility to make small withdrawals at some times and large ones at other times rather than to be locked into a fixed monthly payment regardless of current need. (That's why Roths are so powerful.)
And an IRA as two purposes: to grow money in pre-retirement, and to generate income post-retirement. The problem with allowing annuities in IRAs mostly lies with the likelihood that too many people will opt for an annuity (or be forced into one) during the pre-retirement phase when they should be concentrating on growth.
Question: The House has passed its version of this bill, and the Senate is yet to vote. When do you think the Senate will vote, both versions reconciled, and some version of this passed into law? By year-end 2019? If so, will there be a lead-in time before this impacts those currently or soon-to-be inheritors (i. e., "grandfathering") or will the law go into immediate effect for everyone?
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.
This is not true. 401ks and IRAs are part of one's taxable estate. They are not distributed to heirs per a will but per the beneficiary designation. The fact that they are not taxed as income until withdrawn does not affect their status as part of the estate. If there are insufficient other assets to pay debts of the deceased, then withdrawals from the IRA to pay those debts will be required.
Given the current estate tax exemption of $11.4 million, it will much less of an issue than previously.
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.
Very true. That's why Billionaires such as Buffett and Soros support the political party that wants higher tax rates: Buffett and Soros already have theirs, and they want a deep moat to keep out the mere millionaires.
The following image of a newspaper clipping in Palo Alto says it all:
If our elected officials wish to raise taxes, they should vote to raise taxes in a straight forward open honest bill, not a back-door, back-room dishonest way where they say "oh, I never voted for a tax increase."
The reason the stretch IRA was created in the first place was precisely for wealth transfer.
Incorrect. A tax-advantaged account MUST have rules for final distribution, or no one would invest in them. Why put money into an account which vanishes upon your death?
There is no such account as a "Stretch IRA"; it's merely the name of a popular strategy. If you disagree, please show us a new IRA account form from any custodian with the choices of "Traditional", "Roth", and "Stretch" following the question "Which type of IRA do you wish to establish?"
There are many ways to transfer wealth, I don’t think most people have that much in an IRA anyway. Plus if you have more money, like in decamillions, account outside of IRA receives a step up value, much more beneficial to hiers.
I don’t get too excited about this bill one way or the other like stretching the RMD for two more years does very little for a large account.
Well.....I hope you have all your medical expense possibilities completely covered by some kind of insurance. Because $55K in reserve is not much if you are going to have to rely only on Medicare which does not cover many things commonly encountered by seniors: hearing aids, orthotics, and dental (one single implant can easily cost $5000, as I found out last year), to name a few.
Or if your house needs a new roof ($10K easily), heating or central AC system, or other major repair that could cost thousands.
I've had a Mexican Handyman roommate in my house for 20 years now and anything that goes south on my house is immediately repaired, free of charge, in lieu of rent.
I moved to Tucson for the proximity to Mexico. I haven't seen an American Dentist in 26 years. And I've seen other specialists in Mexico as well.
I have COPD and I don't expect to live much longer in this poor-excuse-for-a-world, so I fear not! More than likely I'll miss out on the Greatest Show the World has ever seen, the Nuclear Holocaust, which could happen any day now.
Very true. That's why Billionaires such as Buffett and Soros support the political party that wants higher tax rates: Buffett and Soros already have theirs, and they want a deep moat to keep out the mere millionaires.
The following image of a newspaper clipping in Palo Alto says it all:
If our elected officials wish to raise taxes, they should vote to raise taxes in a straight forward open honest bill, not a back-door, back-room dishonest way where they say "oh, I never voted for a tax increase."
Unless you close the tax loopholes, it's arbitrary what the tax rates are, raising the taxes only makes the ignorant poor feel a little better. Back in the 50's, with a tax of 90%, how could Reagan then afford a home in Pacific Palisade and a ranch in the San Fernando Valley? It's the tax consultants that get rich when they increase the tax rates.
I've long known worry and stress are negative emotions, which can reduce your immune system and perhaps cause illnesses, so worrying and stressing out about the future, what does it accomplish?
I'm more concerned about the longevity of this dying planet!
I live in a 55+ mobile home community with a host of cheap resources to draw upon. I know one retired man who does repairs at people's houses, free of charge, just supply the materials. Another man is a retired auto mechanic who's more than happy and willing to fix your car for little or nothing. Internet help? That's just 3 door away! My 64YO Mexican roommate just painted a double wide trailer for $250, and is going to re-coat 2 roofs, $100 each, just supply the materials. I've even gotten in on the act, I offered to paint people's mailboxes and post, free of charge, and even using my own acrylic paint.
I've had a Mexican Handyman roommate in my house for 20 years now and anything that goes south on my house is immediately repaired, free of charge, in lieu of rent.
I moved to Tucson for the proximity to Mexico. I haven't seen an American Dentist in 26 years. And I've seen other specialists in Mexico as well.
I have COPD and I don't expect to live much longer in this poor-excuse-for-a-world, so I fear not! More than likely I'll miss out on the Greatest Show the World has ever seen, the Nuclear Holocaust, which could happen any day now.
Do you find the air in Tucson to help with your breathing? Just curious.
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