Herb from CA posted over 7 years ago:

Although too late for us, raising the age of RMD sounds good. It will depend on the rate of withdrawals as the retiree ages. In addition, raising the contribution age and amount contributed could be a boon to late savers. The worst part of the RESA proposal is to force withdrawal of the inherited IRAs within 5 years. This change can be a disaster for the inheritors, especially if they are in a high tax bracket. The funds saved by the retiree, to be withdrawn in a low tax environment, suddenly is highly taxed. The taxes could, easily, go from 15% to 39%, making the hard work of saving in a tax deferred plan worth much less. Nothing is stated about the Roths. Would they need to be liquidated in 5 years, too? From the analysis it would appear to be likely. Thanks for the review.

John Di Marco from New Jersey posted over 7 years ago:

While delaying the RMD is welcome, changing the actuarial table would be better. Keeping it as is while pushing the RMD out by a year and a half just compresses the period of time that RMDs will be calculated and still forces people to make larger withdrawals. What would be better is to change the life expectancy used for the RMD calculations to 125 or older. This would provide much more flexibility for retirees.

Ken from OH posted over 7 years ago:

The cap on IRA contributions is $6000 plus $1000 for those age 50.

Jean from AAII posted over 7 years ago:

Ken, we've corrected the error. Thanks for letting us know.

Robert from TX posted over 7 years ago:

Converting portions of your IRA to a Roth IRA is making more sense all the time. I'm already in the RMD phase but looking at some numbers, if you pay the IRS and state income taxes on the conversion from a taxable account, you recover your conversion money after 9-10 years depending on your tax bracket. This assumes a 6% return on investments. The projection assumes that you won't take or need money from the converted Roth. The inherited IRA becomes tax free to non-spousal inheritors. It also

Paul from OR posted over 7 years ago:

I have to agree with Herb that the need to liquidate an inherited IRA within 5 years is a terrible idea; it certainly negates any benefits of a 1-2 year delay in RMDs. Is that the real intent here, to collect taxes (way) earlier? Paul Merriman's website has a thorough discussion of the issue.

Greg from TN posted over 7 years ago:

I've not done the numbers but I seriously doubt enabling contributions to an IRA at age 65+ will yield a meaningful increase in the IRA's balance. Similarly, a small delay in the start date of required distributions is likely to be of minor benefit to most. Finally, requiring many beneficiaries to withdraw all monies from inherited accounts in five years would certainly seem to be solely to increase tax revenues. We can debate whether these bills "help" our nation's citizens. But there is no doubt they will increase tax revenue.

Jim from IL posted over 7 years ago:

Eliminating the "stretch" IRA provisions will drastically change the way I had planned to pass much of my estate to my heirs. This is a terrible idea!

MOHAMMED ADVANY from IN posted over 7 years ago:

If the RMD requirement is delayed, then it will increase the age for QCD? Which means Schedule A will be used for QCD until you turn 72. There is no winning with the tax laws.

Bruce Overmier from MN posted over 7 years ago:

The proposed five year distribution for children decedents of the IRA owner applies to amounts above $400,000. Is this limit for EACH 401k/403b, or to ALL accounts combined? This is not clear to me from the article.

Charles Rotblut from IL posted over 7 years ago:

Mohammed, The SECURE Act appears to largely keep the ability to use QCDs at age 70-1/2. Here is the text included in the legislation that passed the House: SEC. 107. REPEAL OF MAXIMUM AGE FOR TRADITIONAL IRA CONTRIBUTIONS. (a) In General.—Paragraph (1) of section 219(d) of the Internal Revenue Code of 1986 is repealed. (b) Coordination With Qualified Charitable Distributions.—Add at the end of section 408(d)(8)(A) of such Code the following: “The amount of distributions not includible in gross income by reason of the preceding sentence for a taxable year (determined without regard to this sentence) shall be reduced (but not below zero) by an amount equal to the excess of— “(i) the aggregate amount of deductions allowed to the taxpayer under section 219 for all taxable years ending on or after the date the taxpayer attains age 70½, over “(ii) the aggregate amount of reductions under this sentence for all taxable years preceding the current taxable year.”. (c) Conforming Amendment.—Subsection (c) of section 408A of the Internal Revenue Code of 1986 is amended by striking paragraph (4) and by redesignating paragraphs (5), (6), and (7) as paragraphs (4), (5), and (6), respectively. (d) Effective Date.— (1) IN GENERAL.—Except as provided in paragraph (2), the amendments made by this section shall apply to contributions made for taxable years beginning after December 31, 2019. (2) SUBSECTION (b).—The amendment made by subsection (b) shall apply to distributions made for taxable years beginning after December 31, 2019 -Charles

Craig Murphy from Colorado posted over 7 years ago:

We can’t blame Uncle Sam for trying to get his money in a timely fashion. Employees who have been fortunate to build retirement accounts large enough to run into the $400,000 threshold should also consider additional means (think trusts, etc) to transfer their wealth. It is kind of ironic to think that many ordinary, hard working taxpayers may now have to face a issue previously limited to the wealthy – how to effectively transfer the bulk of their wealth to their beneficiaries.

James Planey from IL posted over 7 years ago:

To expand on Bruce Overmier's comment, does the $400,000 mean that a non spouse beneficiary can keep the first $400,000 under current regs and that money over $400,000 must be taken out within five years? And yes, is this for each separate retirement account or all combined?

Charles Rotblut from IL posted over 7 years ago:

Here is what RESA says:

(i) IN GENERAL.—In the case of distributions from a defined contribution plan, a trust forming part of such plan shall not constitute a qualified trust under this section unless the plan provides that, if an employee dies before the distribution of the employee’s interest (whether or not such distribution has begun in accordance with subparagraph (A)), so much of the entire interest of any designated beneficiary of the employee as exceeds $400,000 (as of the date of the death of the employee) will be distributed within 5 years after the death of such employee.

APPLICATION TO ELIGIBLE RETIREMENT PLANS.—For purposes of applying the provisions of this subparagraph and subsections (a)(6) and (b)(3) of section 408, all eligible retirement plans (as defined in section 402(c)(8)(B)) other than defined benefit plans shall be treated as defined contribution plans in determining the aggregate account balances to the credit of the designated beneficiary under all defined contribution plans and the amount required to be distributed to each beneficiary under such provisions.

T. V. Narayanan from FL posted over 7 years ago:

This bill will have devastating consequences for retirees who have diligently saved and contributed to a 401 (k) or IRA with the hope that their savings could benefit their children and grandchildren. The requirement that any amount in the IRA exceeding $400,000 should be withdrawn in 5 years will remove much of the benefits from the beneficiaries who inherit the IRA. Moreover, the house bill does not exempt $400,000 from withdrawal requirement. If both the house and senate bills pass as they are now, nobody knows what will be the result after reconciliation. My wife and I worked hard and made a lot of sacrifices to contribute the maximum to our IRA and other retirement plans with the hope that the remainder of our IRA will benefit our children and grandchildren. We played by the rules. Now the greedy politicians are changing the rules so that they can collect more tax money and redistribute it to their constituency of legals and illegals. To add insult to injury, they call it 'SECURE ACT'.

ERS from Mass posted over 7 years ago:

What are the potential effects of SecureAct on a Special Needs Trust beneficiary when the trust is the only or the prime beneficiary of a qualified plan (a 401k or a 403b)? a Roth or a Rollover IRA.? I am 25 years older than my adult special needs son. The 2019 changes in tax rates have already had a sizable negative impact on my potential estate, with only more of the same in the future. I see no benefits to anyone in my situation coming from the passage of the so-called a ""Stable Act"". Are there any?