Bill passes house that gradually raises age for mandatory retirement account withdrawals

[Jingthing]

I don't see any reason why this won't pass in the senate as well. For 401k's and IRA's. Current age is 72. Bill would raise that to 73 in 2023, 74 in 2030 and 75 in 2033.

 

Penalties for not taking these mandatory withdrawals are severe. 

 

There is some talk of getting rid of the mandatory withdraws entirely, but not in this passed house bill. 

 

Bill extending 401(k) withdrawals and boosting auto-enrollment in retirement accounts passes House (yahoo.com)

 

 

[EVENKEEL]

Of all the things going wrong in the US, Why focus on something like this? If you have something against taking money out of 401K at age 72, you have a very positive outlook on your longevity.

[Etaoin Shrdlu]

It would be nice if they would enact those changes.

 

What upset me is that our lawmakers recently did away with the stretch IRA rules and now non-spouse beneficiaries of inherited IRAs have just ten years to withdraw the funds. But I suppose that the stretch rules were a bit of a stretch ???? in that IRAs were intended to be retirement accounts for oldsters and not some kind of lifetime annuity for their children.

[Jingthing]

2 hours ago, EVENKEEL said:

Of all the things going wrong in the US, Why focus on something like this? If you have something against taking money out of 401K at age 72, you have a very positive outlook on your longevity.

It's not so much about taking it out but being forced under heavy penalty to take out a certain minimum dollar amount.

[EVENKEEL]

1 hour ago, Jingthing said:

It's not so much about taking it out but being forced under heavy penalty to take out a certain minimum dollar amount.

You know I don't have a clue as to why there's any age requirement and mandatory withdrawal rules.

Speaking for myself I'm already starting to withdraw alittle bit. Might as well get those taxes paid out over time.  

[Jingthing]

12 minutes ago, EVENKEEL said:

You know I don't have a clue as to why there's any age requirement and mandatory withdrawal rules.

Speaking for myself I'm already starting to withdraw alittle bit. Might as well get those taxes paid out over time.  

The reason is about TAX deferred retirement accounts 

Uncle Sam wants the withdrawals to be taxable income so that people pay TAXES on their nest eggs before its game over.

But I bet a lot of oldsters don't comply because of human error attracting large penalties. I think that is very harsh.

 

But its not a black and white issue. Its not rare for elders to self inflict deprivation out of habit while they actually can afford large withdrawals.

 

The psychology of money saving, investing, and spending is complex and often backfires on people

 

Edited March 31, 2022 by Jingthing

[Berkshire]

Congress is on the warpath over entitlements....again.  I just hope they don't mess with SS, raising the age of eligibility I mean.

[bendejo]

In the previous decade it was revealed that a certain US presidential candidate had an IRA (or was it a 401k?) with millions in it.  This bit of news raised a few eyebrows, a newscaster or 2 remarked "how is this possible?" but it appeared no one took it any further.  I think the cap on annual contributions was still around $15k/year at the time, so even with employer matching contributions...  According to this the initial max contribution was $1,500 in 1974.

 

On 3/30/2022 at 3:42 PM, Jingthing said:

I don't see any reason why this won't pass in the senate

It's not for any of us peons to see, these people do what their sponsors tell them to do.  That is one true non-partisan practice.  Their hard work is providing excuses for why they voted the way they do, my favorite at the moment is the senator from West Virginia who says "I just can't do that to my grandchildren."  That is a great, all-weather bs excuse that can be used for anything.  And use it he does!

Thank god the US is not run by oligarchs. </sarcasm>

 

 

[JimGant]

On 3/31/2022 at 5:42 AM, Jingthing said:

There is some talk of getting rid of the mandatory withdraws entirely,

The Required Minimum Distribution (RMD) requirement for geezers who used tax deferred contributions to more quickly grow their retirement assets -- seems fair. Uncle Sam wants its tax deferred income back into the tax spot light. Now, it does seem reasonable that, if you don't want or need a distribution -- just wait 'til you die and your heirs will then have to pay tax on this IRA/401K ineritance. And at a much faster clip, if they're a young spouse, or younger relatives. Uncle Sam will eventually get it -- but maybe at a slower clip than with the current RMD rules.

 

But, hey, why not move to Thailand, live here over 180 days, then have a certain tax charlatan in Bangkok file your taxes, to include IRA and 401k distributions. According to him, the tax treaty says these distributions are completely free from US taxes. And he's been getting away with this for several years. Sound too good to be true? Duh. (Several threads here on Asean Now about this. Obviously, this guy doesn't advertise this windfall, but he does travel the Thai circuit, giving lectures on his gimmick.)

 

Sorry to depart the reality of this thread.

[EVENKEEL]

2 hours ago, JimGant said:

The Required Minimum Distribution (RMD) requirement for geezers who used tax deferred contributions to more quickly grow their retirement assets -- seems fair. Uncle Sam wants its tax deferred income back into the tax spot light. Now, it does seem reasonable that, if you don't want or need a distribution -- just wait 'til you die and your heirs will then have to pay tax on this IRA/401K ineritance. And at a much faster clip, if they're a young spouse, or younger relatives. Uncle Sam will eventually get it -- but maybe at a slower clip than with the current RMD rules.

 

But, hey, why not move to Thailand, live here over 180 days, then have a certain tax charlatan in Bangkok file your taxes, to include IRA and 401k distributions. According to him, the tax treaty says these distributions are completely free from US taxes. And he's been getting away with this for several years. Sound too good to be true? Duh. (Several threads here on Asean Now about this. Obviously, this guy doesn't advertise this windfall, but he does travel the Thai circuit, giving lectures on his gimmick.)

 

Sorry to depart the reality of this thread.

Good idea, I'll turn my 401K over to a guy I met on Soi 4  Bangkok, give me his info and I'll transfer my monies.

[gamb00ler]

16 hours ago, bendejo said:

In the previous decade it was revealed that a certain US presidential candidate had an IRA (or was it a 401k?) with millions in it.  This bit of news raised a few eyebrows, a newscaster or 2 remarked "how is this possible?" but it appeared no one took it any further.  I think the cap on annual contributions was still around $15k/year at the time, so even with employer matching contributions...  According to this the initial max contribution was $1,500 in 1974.

For self-employed individuals there is the Solo 401(k).  The current maximum contribution for that is 58K on 2021.  That program has been available since 1962.  I did not search for the max. contributions available in earlier years.  Still..... it would be very hard to pump the value to millions.