Proposed changes to 401k plan

[AU64 10,122]

https://www.cnbc.com/2018/08/31/trump-seeks-changes-to-retirement-accounts-in-executive-order.html 

Trump order seeks to ease retirement account rules for required withdrawals

Wonder if there can be bipartisan support for the proposed changes that would give some relief to those of us who are forced to take money out of our 401k accounts (RMD) even if we don't need the money.  Also some help for small companies who would like to establish retirement plans for small numbers of employees but find the cost for such programs excessive. 

[homersapien 11,347]

I don't have a problem with RMD.  It seems fair to me. 

If you don't need the money, take it as a charitable trust distribution and avoid the taxes.

[AU64 10,122]

2 hours ago, homersapien said:

I don't have a problem with RMD.  It seems fair to me. 

If you don't need the money, take it as a charitable trust distribution and avoid the taxes.

What makes it fair ?   I would like to keep it in the account until I actually need to remove it...government is gonna get the tax either way but it unnecessarily reduced my retirement fund.

[homersapien 11,347]

On 8/31/2018 at 11:54 PM, AU64 said:

What makes it fair ?   I would like to keep it in the account until I actually need to remove it...government is gonna get the tax either way but it unnecessarily reduced my retirement fund.

Because that was part of the original formulation.  It wasn't meant to be a tax-free (including earnings) way of building or enhancing an estate, it was meant for funding one's retirement.  

The concept was to allow for tax free contributions and earnings in exchange for paying the taxes when you used them.  And the mandatory withdrawals were specifically designed to prevent people from never withdrawing from their IRA at all, simply in order to have a larger estate.   There's nothing about it that isn't "fair".  Those were the rules set in place at the beginning.

Like I said, if you don't need the money, give it away or pay the taxes and reinvest it.

[AU64 10,122]

12 minutes ago, homersapien said:

Because that was part of the original formulation.  It wasn't meant to be a tax-free (including earnings) way of building or enhancing an estate, it was meant for funding one's retirement.  

The concept was to allow for tax free contributions and earnings in exchange for paying the taxes when you used them.  And the mandatory withdrawals were specifically designed to prevent people from never withdrawing from their IRA at all, simply in order to have a larger estate.   There's nothing about it that isn't "fair".  Those were the rules set in place at the beginning.

Like I said, if you don't need the money, give it away or pay the taxes and reinvest it.

You did not read then that the calculation for RMD is out of date and needs to be adjusted.  

And JMO but what is the difference between saving for retirement...and building an estate ...it is not "tax free" it is only tax deferred.....which means that Uncle get's his at some point either way. 

[homersapien 11,347]

39 minutes ago, AU64 said:

You did not read then that the calculation for RMD is out of date and needs to be adjusted.  

And JMO but what is the difference between saving for retirement...and building an estate ...it is not "tax free" it is only tax deferred.....which means that Uncle get's his at some point either way. 

Sorry, but I took the argument to be that the RMD should be eliminated all together. I don't know enough to comment on a need to adjust it.

To me, an "estate" is what you leave after you die.  The purpose of IRA is for retirement not for increasing the size of your estate.  To look at it another way, why should people who are already wealthy enough to not need retirement help be given a tax benefit to simply increase their estate? 

Estates aren't taxed like income - if taxed at all.  So unless Uncle Sam gets to tax those deferred wages and earnings as income at some, he doesn't "get his at some point".

[TitanTiger 20,465]

The updates to RMD to reflect longer lifespans and allow people to stretch their retirement dollars longer seem good to me. I’m with homer on the RMD not being eliminated.