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 > IRA and new SECURE Act

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p220sigman

Tallahassee, FL, USA

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Posted: 12/18/19 07:34am Link  |  Quote  |  Print  |  Notify Moderator

Deb and Ed M wrote:

I DO resent being told what I can or can not do with our hard-earned money, though.


Especially when you may have already paid taxes on the money one time.

TenOC

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Posted: 12/18/19 07:38am Link  |  Quote  |  Print  |  Notify Moderator

bid_time wrote:

Cash it out over 10 years, pay the taxes, and re-invest the rest; what's the big deal, it's all free money to the kids anyways.


If a $1 million IRA passes to a working upper-middle class adult child, he would have to take payouts annually, adding $100,000 of annual (taxable) income on top of his salary for a decade. If the IRA is a Roth and not taxable income, the future investment income of the $100,000 will be taxable.

1. Live in a high-income state tax, and half the annual payout could be consumed by taxes.

2. The adult child does not need the money while they are working. Better to have the money when they retire and in a lower tax bracket.


Please give me enough troubles, uncertainty, problems, obstacles and STRESS so that I do not become arrogant, proud, and smug in my own abilities, and enough blessings and good times that I realize that someone else is in charge of my life.

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bid_time

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Posted: 12/18/19 07:59am Link  |  Quote  |  Print  |  Notify Moderator

An IRA is intended to be a "Retirement" account for the purpose of funding the retirement of the person(s) that accumulated the money in a more tax friendly environment. It is not intended to be a tax friendly "Inheritance" account for your kids. It's still free money for your kids, minus deferred taxes due.
P.S. You don't pay taxes on a IRA twice. Either you pay the tax when you earn the money (Roth IRA), or you pay the tax when you retire (Regular IRA).
Beyond that, I'm really struggling to have a lot of sympathy for someone that has and extra $1 million laying around they want to pass on "tax free".

* This post was last edited 12/18/19 11:18am by an administrator/moderator *   View edit history





Matt_Colie

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Posted: 12/18/19 09:45am Link  |  Quote  |  Print  |  Notify Moderator

I don't much care anymore. The Abrogation of the GM and Chrysler corporate bonds took away any hope I had. I'm so glad that I didn't have big toys or a good vacation in that last 30 years. That way the scrimping and saving became a way of life and finally death.

Matt


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A sailor, his bride and their black dogs going to see some dry places that have Geocaches in a coach made the year we married.


GeoBoy

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Posted: 12/18/19 11:32am Link  |  Quote  |  Print  |  Notify Moderator

bid_time wrote:

An IRA is intended to be a "Retirement" account for the purpose of funding the retirement of the person(s) that accumulated the money in a more tax friendly environment. It is not intended to be a tax friendly "Inheritance" account for your kids. It's still free money for your kids, minus deferred taxes due.
P.S. You don't pay taxes on a IRA twice. Either you pay the tax when you earn the money (Roth IRA), or you pay the tax when you retire (Regular IRA).
Beyond that, I'm really struggling to have a lot of sympathy for someone that has and extra $1 million laying around they want to pass on "tax free".

X2

pnichols

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Posted: 12/18/19 02:29pm Link  |  Quote  |  Print  |  Notify Moderator

sayoung wrote:

No, you need to spend every dime on you & spouse before you pass on.


Hmmm ... how in the world do you carefully control the spending-rate timing to do this, versus the how-long-you-live timing to do this, versus the how-much-medical-trouble timing to do this?


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Lwiddis

Monterey, CA

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Posted: 12/18/19 02:41pm Link  |  Quote  |  Print  |  Notify Moderator

Sorry, Matt, but the first financial lesson I learned from my parents was don’t put all, or most, of your eggs in one company or one industry. My “hit” was about four percent...GM stock. I lost some on WPPSS, also called "Whoops” too.


Winnebago 2101DS TT & 2020 Chevy Silverado 1500 LTZ Z71, 300 watts solar-parallel & MPPT, Trojan T-125s. TALL pole for flags. Prefer USFS, COE, BLM, NPS, TVA, USF&WS, state & county camps. Bicyclist! 14 year Army vet - 11B40 then 11A - (MOS 1542 & 1560)


sayoung

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Posted: 12/18/19 07:38pm Link  |  Quote  |  Print  |  Notify Moderator

pnichols wrote:

sayoung wrote:

No, you need to spend every dime on you & spouse before you pass on.


Hmmm ... how in the world do you carefully control the spending-rate timing to do this, versus the how-long-you-live timing to do this, versus the how-much-medical-trouble timing to do this?

My point is don't worry about what you leave your children. DW & I got ours out of college debt free with a good education to create their own wealth. Sure some of our retirement funds will be passed on but how much that is will be just what's left.
As to your question about control, it's just a WAG on how much & when to take out funds. We did some thinking about a fixed amount taken out each year but so far haven't touched the funds in our 4 years of retirement. How long we can sustain this is unknown, too many " what if ". I will say we have zero IRA's as my funding strategies were/are different than typical plans.

pnichols

The Other California

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Posted: 12/27/19 11:43pm Link  |  Quote  |  Print  |  Notify Moderator

TenOC wrote:

This is NOT a political posting. It is an estate planing posting.

Many of the RV friends I know have a large IRA that they expect to pass on to there children in the hope that the children will be able to withdraw (stretch out) funds from the IRA over the child lifetime. The new SECURE Act which is part of the spending bill to prevent a government shutdown next week will require ALL the funds in the IRA to be withdrawn in 10 years after a person death -- not the beneficiary child's lifetime. You may want to Google SECURE Act.

I think I need to die before the end of the year.


The SECURE Act notwithstanding ... can't the receiving children or their guardians draw out all the funds within the ten years and then merely use the money to reestablish their own new IRA? [emoticon]

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