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At the end of 2022, SECURE Act 2.0 was passed, and with it, changes are coming to the retirement planning space.
RMD rules, QCD limits, retirement contributions, 529 to Roth Rollover, and more… All of these areas are seeing some massive adjustments.
In today’s video, we talk about 3 major changes coming to required minimum distributions.
Timestamps:
0:00 Your RMD Age is Changing…
0:12 SECURE Act 2.0 Explained
0:48 The New RMD Rules
1:42 No Roth 401k RMDs/25% RMD Penalty
3:17 How will this impact your retirement tax plan?
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I like the new RMD age adjustments. There SHOULD BE NO TAXES on Social Security. We worked our butts off for decades for our Social Security benefit. Now, with the 2022 5.2% and 2023 8.2% COLA, the tax threshold should AT LEAST BE INCREASED by 13.4%.
I'm new to your channel so what does RMD stand for?
I'd like to know more about in-plan conversions, 401k to Roth 401k. Can these be phased and incremental or must they be done in one slug? Does it depend on plan details or do we al have the same options for this?
repeal the tax cuts to the rich and corporations and have them the same as in 1960 under Eisenhower
There is a glitch in the law increasing the RMD age that affects individuals born in 1959. The RMD age is 73 for individuals who attains age 73 prior to 2033. A person born in 1959 turns 73 in 2033. It increases to age 75 for an individual who attains age 74 after 2032. An individual born in 1959 turns 74 in 2033. This is going to have to be fixed. My own interpretation of the law as it is written is that the 1959 individual will have to take an RMD for 2032, will get to take 2033 off, and will have to resume RMDs in 2034.
I’m 73, just met with my retirement fund manager and he said he had good news and bad news for me,,
Good news, I had enough money to live until death
Bad news, I have to die in 5 years
I was born in 1957 and have read my new RMD age will be 74. Is this wrong?
None of this matters. The bigger change in RMDS is in pat 1 of the Biden Build Back Better Plan written by Congressman Neal of Mass and Senator Wyden of Oregon and signed into law by Joseph Robinette Biden that takes effect in 2028. It would take 2 pages to go through all the bad things in this bill. Some people are stunned that 20 "radicals" can block Congress. Yet we have 3 people that controlled things just 1 year ago. The new law will cap retirement accounts and will require an RMD no matter what your age if your account becomes what Robinette, Neal and Wyden think is "too big" and will require an RMD if it exceeds this amount to get it back down to an amount that they think is appropriate. Congress has spent us into oblivion through worthless wars, wall street bailouts, green new deals, covid relief, handouts to illegals and has balanced their reckless spending off the backs of the poor, elderly and those on fixed income through inflation and they waltz on without impunity and live on the tax payers dime. We should have a 2 line tax code. If you make under 250K you pay 5% over you pay what it takes to pay for schools army ect. No Deductions. We would not need to hire 87 K new IRS agents. A nice easy peasy tax code. No more pandering to voters so they can keep their position of power.
I'm not sorry for all the comments I have made in the various replies. I had to argue on National Radio with Clark Howard during his show a few years ago. NO ONE! not him, Ramsey, or any one of the retirement "specialists" on radio every weekend in my area would touch or talk about the RMD. After I pointed Clark in the right direction to help people correctly on this subject, he did begin to talk about it nationally. And others finally have joined the band wagon. I am NOT looking for accolades, I am hoping you all will understand about this bad tax for the seniors going into fixed income. Please, become familiar.
Look folks, Congress invented the 401k/403b and made us think it was friendly. The fact is when combined with the RMD that most people just heard about and don't understand is going to MAKE YOU pay taxes for the rest of your life, it will be forwarded to your wife and then your kids. Read the IRS publication and Tables for understanding. It would have done better to get your money into ROTH. As soon as you turn 59 1/2, start by rolling out of the 401k, pay the extra tax now. It will get worse after retirement because the brackets are guaranteed to go up (by Congress design). Your RMD is on your accounts, and each account has the RMD, i.e., you figure on an annuity, and separately on the 401k, not combined for only one RMD. And your RMD has nothing to do with combining you wife's 401k and her annuity. And notice if you will, the standard deductions did not keep up with the alleged pay increases, means a larger tax burden. Seriously, you HAVE TO plan, and one tool is to do what-if with your current Turbo Tax.
Can converting to Roth be counted as part of the RMD?
Does the elimination of RMD for Roth 401(k) accounts also apply to 457(b) dollars?
Actually the delaying of RMDs increases revenue for the IRS. More revenue will be collected because it will be in higher tax brackets. The RMD paid at 75 will be larger than the one at 72, hence more tax revenue. A larger percentage of the RMDs will be paid as a single tax payer, also resulting in more IRS revenue. So delaying RMDs actually provides more revenue for the IRS for anyone that has an RMD problem.
What if your husband was born in 1955 and you were born in 1960?
Thanks so much for your videos. I'm 62 and just learning about RMDs and Roth Conversions. I'm in a 403b and I've read that I can't make Roth Conversions until I have left my current employment. I plan to retire from this company so I will be there at least until 65. Is there anything I can do to mitigate the RMD issue? Thanks so much.
Good information. I resent the side comments that reflect the speaker's ideological bias, though. "How will Congress spend the tax dollars that we don't have" suggests that any government policy not based on a balanced budget is wrong. That's nonsense. Just give us the facts without the spin, please.
If the IRS extends my RMD anymore, I’ll die rich.
Eric, thank you. I am binge watching your videos. I consider myself tax savvy and I can't say I've learned anything new about tax law (so far). However, tax law is not what you're teaching me. The "strategy" of using all my accounts, assets, and positions as weapons to maximize my tax savings is what I'm learning from you. For example, in my case, tax loss harvesting to pay my ROTH conversion taxes is proving to be a brilliant idea. I didn't even think about this approach until I watched your videos. I'm glad I kept these stinkers around so I can use them in this way. Thank you for taking the time and energy to present all this excellent content.
My Roth conversion plan is not keyed on RMDs but rather when I take Social Security, which in turn is informed by IRMAA. That is, delaying SS as long as possible without triggering IRMAA, and doing conversions between working and SS. Out of curiosity, are RMD percentages increased (compressing the RMDs in a shorter time frame) or are the percentages the same (RMDs just shift)?
Will the Uniform Lifetime Factor Tables for RMD’s be revised or remain as-is?
Almost no one ever actually paid the 50% missed RMD penalty, they just asked for and received forgiveness. I wonder now that the penalty is lower, will the IRS be less forgiving?