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There absolutely are valid reasons to invest in an annuity and usually the timing is around your retirement date. Funneling financially unsophisticated people into annuities during the accumulation and growth stages of their retirement savings is just plain wrong and that's what this legislation is going to allow.
Agree. Annuities aren't growth vehicles, they are for generating a steady income. It makes no sense whatsoever to hold one inside a retirement account, any more than it does to wear a raincoat in the shower. Withdrawing money from a retirement account upon retiring and using it to buy an annuity, on the other hand, can make perfect sense.
Annuities simply don't belong in a retirement account, so why allow them to be sold inside one?
The OP has some serious comprehension issues if he's thinking that article is about the government coming for our IRAs. Typical leftist garbage.
They aren't coming after the IRA. They are forcing the beneficiary (such as your child) to withdraw everything from the IRA within 10 years -- withdrawals are taxable income so the government gets more tax money sooner. In addition, if your child/inheritor is still working, it puts him in a higher tax bracket, so the government also gets more taxes from his income.
I can visualize a scenario where my son is still withdrawing from my IRA when he hits 72 and has to start drawing on his own. A double wammy, taxwise.
Added: this has nothing to do with leftist liberals. It is just math.
They aren't coming after the IRA. They are forcing the beneficiary (such as your child) to withdraw everything from the IRA within 10 years -- withdrawals are taxable income so the government gets more tax money sooner. In addition, if your child/inheritor is still working, it puts him in a higher tax bracket, so the government also gets more taxes from his income. ...
Exactly. The main impact is on a high-earning near-retiree, say of age 55, whose 85-year-old parent dies. The parent had been taking RMDs for the past 15 years, but still has a hefty sum remaining untapped. Now the "child" ends up with the tax-burden. Formerly it was at the "child's" RMD rate, which was bad enough. In the proposed scheme, it would be 10%/year.
It pushes the RMD out to 72.5 and it forces non spouses that inherit your IRA to withdraw the funds in 10 years.
Well in that case I am all for it. I'd much rather have the option to let my IRA grow untouched for another two years than have to start taking money out at 70.5 !
<sigh> The Secure Act is just another tax increase, but it is dressed in such a way that politicians can say they never voted for a tax increase.
The main problem with the Secure Act is that it eliminates the stretch IRA. At our own death, the stretch IRA lets us leave our IRA assets to children & grandchildren, for example. Payouts tend to be relatively small for children but grow in size over the decades until the inherited IRA might provide for the child’s own retirement.
Under this tax increase, our children & grandchildren would be forced to take large IRA distributions quickly, ensuring they are in the top marginal tax bracket, and that much of the IRA distributions would -- surprise -- go back to the IRS. As much as one-third more of an inherited IRA would get gobbled up by taxes than under current rules.
<sigh> The Secure Act is just another tax increase, but it is dressed in such a way that politicians can say they never voted for a tax increase.
The main problem with the Secure Act is that it eliminates the stretch IRA. At our own death, the stretch IRA lets us leave our IRA assets to children & grandchildren, for example. Payouts tend to be relatively small for children but grow in size over the decades until the inherited IRA might provide for the child’s own retirement.
Under this tax increase, our children & grandchildren would be forced to take large IRA distributions quickly, ensuring they are in the top marginal tax bracket, and that much of the IRA distributions would -- surprise -- go back to the IRS. As much as one-third more of an inherited IRA would get gobbled up by taxes than under current rules.
So? Who cares? It's your retirement account, not your children's. Personally, I would make the whole balance subject to tax as of the date of death, assuming it's children and not the spouse who inherit. If the children want to invest, they can put the balance in a Roth account.
So? Who cares? It's your retirement account, not your children's. Personally, I would make the whole balance subject to tax as of the date of death, assuming it's children and not the spouse who inherit. If the children want to invest, they can put the balance in a Roth account.
That's harsh. Do you have parents? Do you have children?
So? Who cares? It's your retirement account, not your children's. Personally, I would make the whole balance subject to tax as of the date of death, assuming it's children and not the spouse who inherit. If the children want to invest, they can put the balance in a Roth account.
I am not sure they could put more than the Roth limit in their own account. But this law could be a big reason to do a Roth conversion for IRA/401k funds.
I am not sure they could put more than the Roth limit in their own account. But this law could be a big reason to do a Roth conversion for IRA/401k funds.
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.
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