Business & Investing
Sponsored by

SECURE act

13,122 Views | 181 Replies | Last: 4 yr ago by Casey TableTennis
nactownag
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
8:56a, 12/18/19
AG
Changes are being made to inherited IRA accounts. Now you will be able to stretch over a maximum of 10 years.

Those of you with large pre-tax retirement accounts or parents with large pre-tax retirement accounts need to seriously evaluate the potential benefits of doing a Roth conversion or other strategy to reduce taxes in the future.
Reply Quote
Farmer @ Johnsongrass, TX
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to nactownag • 1:15p, 12/18/19
Reply Quote
1 edit
nactownag
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Farmer @ Johnsongrass, TX • 1:32p, 12/18/19
AG
I haven't heard that at all but then again this is all new so who knows what could change.

I am expecting that they will eventually reduce to 5 year distribution from inherited IRA. That's how the rules work for tax deferred annuities already.
Reply Quote
cjsag94
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
5:36a, 12/20/19
AG
This is a big deal.

For those with large IRAs, and especially coupled with few beneficiaries to divide it... The income taxation on the 10 year withdrawal (added to beneficiaries normal income) can get really close to looking just like the inheritance tax rate.

This is redistribution of wealth over the next generation.
Reply Quote
11
nactownag
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to cjsag94 • 8:50a, 12/20/19
AG
Indeed. Just wait until the change it to 5 year distribution instead of 10 years.

Folks with large IRA should consider Roth conversion or leaving IRA to charitable endeavor when passing and funding an insurance policy for children's inheritance
Reply Quote
2
2wealfth Man
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
8:57a, 12/20/19
AG
Is the life expectancy method still in play for inherited IRA's?
Reply Quote
nactownag
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to 2wealfth Man • 9:01a, 12/20/19
AG
Only if you die before the end of this year
Reply Quote
3
Quinn
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
1:18p, 12/20/19
AG
This does not apply if you already have an inherited IRA, correct?
Reply Quote
cjsag94
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Quinn • 1:30p, 12/20/19
AG
Quinn said:
This does not apply if you already have an inherited IRA, correct?
That is presumed to be correct. Everything I have heard is this will only change upon passage of the bill moving forward. Same goes for RMD age changing to 72. If you had to take RMD this year, will still have to next year even if you aren't turning 72 yet.

But I'd double check these details once the final version is in place.
Reply Quote
nactownag
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
2:32p, 12/20/19
AG
If you have an inherited IRA today the rules are not changing. And if you inherit an IRA prior to 12/31 the same rules apply. If you inherit an IRA on 1/1/20 or later the new rules apply is my understanding.

And if you turn 70.5 in 2019 then old rules. If not then you are going to use the new rules.
Reply Quote
1
insulator_king
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
5:12p, 12/22/19
AG
Marketwatch had an article about it.

https://www.marketwatch.com/story/with-president-trumps-signature-the-secure-act-is-passed-here-are-the-most-important-things-to-know-2019-12-21?siteid=yhoof2&yptr=yahoo

Anything else to take from it?

Noticed that annuities are now able to be used in 401K's.
Reply Quote
TriAg2010
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
7:25p, 12/22/19
AG
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Reply Quote
16
nactownag
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to TriAg2010 • 9:09p, 12/22/19
AG
Wow!
Reply Quote
9
TriAg2010
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
9:58p, 12/22/19
AG
Constitutional government requires limiting principles. *Shrugs*
Reply Quote
ORAggieFan
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to TriAg2010 • 10:41p, 12/22/19
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.

I'm very confused, taxes on an IRA are paid when withdrawn, so taxes are paid.
Reply Quote
7
nactownag
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ORAggieFan • 11:48p, 12/22/19
AG
I think he's saying he feels when I inherit my Dads IRA someday I should be required to pay income taxes on the entire value the year I inherit the account. In other words the government should be 37% beneficiary of my dads account.
Reply Quote
15
Farmer @ Johnsongrass, TX
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to nactownag • 4:19a, 12/23/19
Reply Quote
1
2 edits
cjsag94
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Farmer @ Johnsongrass, TX • 7:01a, 12/23/19
AG
I agree wholeheartedly with you Farmer.

I'll go one step further on moving towards Roth's. Back in 2009 when everything was down, they opened the conversion options fully, and have 2 years to spread the taxes, I converted everything. Since, I've done nothing but Roth where I have the choice.

The one step further, unless it's really significant, you should do Roth regardless of tax rate expectations. To me, the only time you shouldn't, is if you are going to contribute less because you need the saved taxes to actually max it out. I haven't seen that play out... The reality I usually see is that most people just use tax refunds like found money and spend whatever is there.

If the saved taxes don't lead to saving more... Then it is a flawed incentive to choose that method of savings simply to get a bigger tax refund.
Reply Quote
cjsag94
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to TriAg2010 • 7:10a, 12/23/19
AG
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.


TriAg, I get where your heart is. You are missing the flip side though. Responsible people spend decades saving and being stewards, living within their means. Our tax code, however, makes this a problem.

Creating multi generational wealth is a noble goal. It shouldn't be derailed at the 11th hour by a change like this.

Here's an example... Guy in his mid-60s accumulates$12,000,000net worth, half in IRA. He dies leaving inheritance to 2 children who are also working hard.

Now, this new law, will take that $6,000,000, divide it in 2, and now force them to pull roughly$400,00/ year for 10 years. They will now be paying full tax rate, lose deductions, excess cap gains rates, excess Medicare tax, and whatever else government decides to throw in.

In short, they will lose 40-50% to the IRS, as well as the loss of compounding growth on those funds that should have supported their financial plan.

So yes, I guess it's cool amongst many these days to sit back and make arguments such as yours... But to say instead the government should take 40% of a family's wealth is clearly becoming a divide in this country .. it is redistribution of wealth.
Reply Quote
16
1 edit
IrishTxAggie
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to TriAg2010 • 7:27a, 12/23/19
AG
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Tell ya what; I'll happily take the eventual tax hit if you can give me back the birthdays, tee ball games, football games, holidays, etc. my father missed out on with my family so he could provide us with the foundation to build legacy wealth. He sacrificed those moments with us so my brother and I wouldn't necessarily have to when we start families. Sounds fair right?
Reply Quote
19
GE
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to cjsag94 • 7:41a, 12/23/19
AG
cjsag94 said:
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
TriAg, I get where your heart is. You are missing the flip side though. Responsible people spend decades saving and being stewards, living within their means. Our tax code, however, makes this a problem.

Creating multi generational wealth is a noble goal. It shouldn't be derailed at the 11th hour by a change like this.

Here's an example... Guy in his mid-60s accumulates$12,000,000net worth, half in IRA. He dies leaving inheritance to 2 children who are also working hard.

Now, this new law, will take that $6,000,000, divide it in 2, and now force them to pull roughly$400,00/ year for 10 years. They will now be paying full tax rate, lose deductions, excess cap gains rates, excess Medicare tax, and whatever else government decides to throw in.

In short, they will lose 40-50% to the IRS, as well as the loss of compounding growth on those funds that should have supported their financial plan.

So yes, I guess it's cool amongst many these days to sit back and make arguments such as yours... But to say instead the government should take 40% of a family's wealth is clearly becoming a divide in this country .. it is redistribution of wealth.
Oh the horror...

If these dollars you are talking about had been taxed when earned I would be more sympathetic to this, but they weren't.

There are ample vehicles to pass wealth on to children without relying on deferring tax for generations.

The children in your scenario are set for life if they also actually work and support themselves like you implied. If they take their $1.8 million and invest it for 30 years, which is reasonable based on the parent age you gave, they'll have somewhere between $10 and $20 million. In addition to the other $3 million they inherited.
Reply Quote
1
1 edit
cjsag94
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to GE • 8:20a, 12/23/19
AG
For what it's worth...I find it hard to believe you would be "more sympathetic" had the contributions to these accounts been made with post tax dollars.

"Oh the horror" -

Look, as I said, there is a growing divide. But I believe everyone who stands on your platform should start their argument with the following statement -

"I believe the federal government, and the federal tax brackets, and tax codes should be designed to establish at what point an individual has more than they need. Then they should establish plans to take the excess and use it for various government programs, including wars, free healthcare, free education, income for all, etc.."

If that is your position...then go to town. As I've said, there is a growing divide in this country as more and more people want just that. Which is fine...but be clear that is what you are asking for. Don't hide behind - I'd be more sympathetic had you funded this account with after tax dollars. I seriously doubt your issue is with the countries lost revenue from 50 years ago.
Reply Quote
13
Post removed:
by user
8:28a, 12/23/19
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to IrishTxAggie • 8:37a, 12/23/19
AG
IrishTxAggie said:
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Tell ya what; I'll happily take the eventual tax hit if you can give me back the birthdays, tee ball games, football games, holidays, etc. my father missed out on with my family so he could provide us with the foundation to build legacy wealth. He sacrificed those moments with us so my brother and I wouldn't necessarily have to when we start families. Sounds fair right?

Respectfully, this argument is drivel.

Those are choices you have to make in life... but make no mistake they are your choices. I've missed things for my kids in lieu of work too. But that shouldn't make my earnings exempt from taxes.
Reply Quote
6
1 edit
GE
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to cjsag94 • 8:38a, 12/23/19
AG
cjsag94 said:
For what it's worth...I find it hard to believe you would be "more sympathetic" had the contributions to these accounts been made with post tax dollars.

"Oh the horror" -

Look, as I said, there is a growing divide. But I believe everyone who stands on your platform should start their argument with the following statement -

"I believe the federal government, and the federal tax brackets, and tax codes should be designed to establish at what point an individual has more than they need. Then they should establish plans to take the excess and use it for various government programs, including wars, free healthcare, free education, income for all, etc.."

If that is your position...then go to town. As I've said, there is a growing divide in this country as more and more people want just that. Which is fine...but be clear that is what you are asking for. Don't hide behind - I'd be more sympathetic had you funded this account with after tax dollars. I seriously doubt your issue is with the countries lost revenue from 50 years ago.
You're barking up the wrong tree. I don't believe in an inheritance tax or a wealth tax. But either the income tax or a sales tax is necessary. What we're talking about here is something that has already deferred the income tax for a damn long time.
Reply Quote
IrishTxAggie
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ATM9000 • 8:40a, 12/23/19
AG
ATM9000 said:
IrishTxAggie said:
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Tell ya what; I'll happily take the eventual tax hit if you can give me back the birthdays, tee ball games, football games, holidays, etc. my father missed out on with my family so he could provide us with the foundation to build legacy wealth. He sacrificed those moments with us so my brother and I wouldn't necessarily have to when we start families. Sounds fair right?

Respectfully, this argument is drivel.

Those are choices you have to make in life... but make no mistake they are your choices. I've missed things for my kids in lieu of work too. But that shouldn't make my earnings exempt from taxes.
They're not exempt from taxes. Once its drawn on the taxes are paid. But now they force the draw to force taxes on the feds desired time table.
Reply Quote
9
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to IrishTxAggie • 8:47a, 12/23/19
AG
IrishTxAggie said:
ATM9000 said:
IrishTxAggie said:
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Tell ya what; I'll happily take the eventual tax hit if you can give me back the birthdays, tee ball games, football games, holidays, etc. my father missed out on with my family so he could provide us with the foundation to build legacy wealth. He sacrificed those moments with us so my brother and I wouldn't necessarily have to when we start families. Sounds fair right?

Respectfully, this argument is drivel.

Those are choices you have to make in life... but make no mistake they are your choices. I've missed things for my kids in lieu of work too. But that shouldn't make my earnings exempt from taxes.
They're not exempt from taxes. Once its drawn on the taxes are paid. But now they force the draw to force taxes on the feds desired time table.

Fair enough... doesn't make your argument less drivel though.
Reply Quote
1
IrishTxAggie
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to ATM9000 • 8:59a, 12/23/19
AG
ATM9000 said:
IrishTxAggie said:
ATM9000 said:
IrishTxAggie said:
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Tell ya what; I'll happily take the eventual tax hit if you can give me back the birthdays, tee ball games, football games, holidays, etc. my father missed out on with my family so he could provide us with the foundation to build legacy wealth. He sacrificed those moments with us so my brother and I wouldn't necessarily have to when we start families. Sounds fair right?

Respectfully, this argument is drivel.

Those are choices you have to make in life... but make no mistake they are your choices. I've missed things for my kids in lieu of work too. But that shouldn't make my earnings exempt from taxes.
They're not exempt from taxes. Once its drawn on the taxes are paid. But now they force the draw to force taxes on the feds desired time table.

Fair enough... doesn't make your argument less drivel though.
Why is it drivel? My dad chose to do those things for us and was financially rewarded for it. A reward that he feels should be passed on to us because we sacrificed as well. What is drivel about that?
Reply Quote
4
TriAg2010
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to nactownag • 9:01a, 12/23/19
AG
nactownag said:
I think he's saying he feels when I inherit my Dads IRA someday I should be required to pay income taxes on the entire value the year I inherit the account. In other words the government should be 37% beneficiary of my dads account.


I think it should pass to you with no tax liability but the assets should lose their ongoing ability to grow tax free (or tax deferred). E.g., you start paying capital gains tax on dividends.
Reply Quote
2
GE
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to IrishTxAggie • 9:15a, 12/23/19
AG
IrishTxAggie said:
ATM9000 said:
IrishTxAggie said:
ATM9000 said:
IrishTxAggie said:
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Tell ya what; I'll happily take the eventual tax hit if you can give me back the birthdays, tee ball games, football games, holidays, etc. my father missed out on with my family so he could provide us with the foundation to build legacy wealth. He sacrificed those moments with us so my brother and I wouldn't necessarily have to when we start families. Sounds fair right?

Respectfully, this argument is drivel.

Those are choices you have to make in life... but make no mistake they are your choices. I've missed things for my kids in lieu of work too. But that shouldn't make my earnings exempt from taxes.
They're not exempt from taxes. Once its drawn on the taxes are paid. But now they force the draw to force taxes on the feds desired time table.

Fair enough... doesn't make your argument less drivel though.
Why is it drivel? My dad chose to do those things for us and was financially rewarded for it. A reward that he feels should be passed on to us because we sacrificed as well. What is drivel about that?
The implication that your dad missed tee ball games he wouldn't have otherwise missed because there wasn't a 10 year withdrawal window is absurd.
Reply Quote
11
ATM9000
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to IrishTxAggie • 9:20a, 12/23/19
AG
IrishTxAggie said:
ATM9000 said:
IrishTxAggie said:
ATM9000 said:
IrishTxAggie said:
TriAg2010 said:
I know this is an unpopular opinion: but I'm totally fine if assets inherited from an IRA roll into a taxable brokerage account for the inheritors. The point of retirement accounts is to secure *your* retirement, not create a multi-generational tax avoidance scheme. Don't get greedy and ruin a good thing.
Tell ya what; I'll happily take the eventual tax hit if you can give me back the birthdays, tee ball games, football games, holidays, etc. my father missed out on with my family so he could provide us with the foundation to build legacy wealth. He sacrificed those moments with us so my brother and I wouldn't necessarily have to when we start families. Sounds fair right?

Respectfully, this argument is drivel.

Those are choices you have to make in life... but make no mistake they are your choices. I've missed things for my kids in lieu of work too. But that shouldn't make my earnings exempt from taxes.
They're not exempt from taxes. Once its drawn on the taxes are paid. But now they force the draw to force taxes on the feds desired time table.

Fair enough... doesn't make your argument less drivel though.
Why is it drivel? My dad chose to do those things for us and was financially rewarded for it. A reward that he feels should be passed on to us because we sacrificed as well. What is drivel about that?


It is drivel because the law doesn't really change or circumvent your Dad's wishes around how or who his wealth should be distributed to at all.
Reply Quote
FrioAg 00
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
9:22a, 12/23/19
AG
I am with the folks here who don't find themselves sympathetic to children's deferring taxes I'm never-before-taxes income of their parents

I'm general I'd like to see us, as a country, lower marginal tax rates on income in favor of taxes on various forms of wealth transfer

Incentivize people to work, including would be trust fund kids.
Reply Quote
Stive
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
9:33a, 12/23/19
AG
This thread has already surpassed my expectations and has all kinds of additional potential.
Reply Quote
8
Farmer @ Johnsongrass, TX
User Profile Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to TriAg2010 • 9:35a, 12/23/19
Reply Quote
1 edit
Stive
User Profile
Private Message
Ignore User Stop Ignoring
How long do you want to ignore this user?
24 hours One week Permanently Cancel
In reply to Farmer @ Johnsongrass, TX • 9:41a, 12/23/19
AG
Yeah this is going to be a big industry boost to the second to die life insurance world. We've already been using this as a conversion strategy for the last few years even without the new rules. This vote gave that side of the equation a steroid induced boost.
Reply Quote
1 edit
 
×
subscribe Verify your student status
See Subscription Benefits
Trial only available to users who have never subscribed or participated in a previous trial.