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Originally Posted by oldmako (Post 3192410)

Please elaborate.

Note, the post above does not apply to Roth assets. While they still must be withdrawn within10 years of inheritance, they would not be taxed.

Quote:

Originally Posted by NotMrNiceGuy (Post 3192417)

Look up something called the “Stretch IRA” or “Stretch 401(k)” for more information.

Here’s the Cliff’s Notes version:
Prior to last year, an inherited IRA could be passed on to an heir and the RMDs would then be based on the recipient’s life expectancy. The SECURE Act changed the time period for RMDs from life expectancy to ten years. Now the inherited IRA must be withdrawn in 10 years so Uncle Sam gets his take sooner. This means if you passed on $2M to your kid, they take out $200,000 per year which puts them in a higher tax bracket for the duration of their withdrawals rather than if they just took out maybe $40,000 per year starting in their 30’s. It effectively transfers a large portion of your kid’s inheritance to the government and they have to transfer the remainder to a taxable account after the ten years is up.

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I agree the change was not positive. However, your child will still get the money tax free. They simply only get ten years of tax free growth instead of decades. So, they will likely miss out on millions in gains if you passed them a $2 million Roth IRA account, which is quite possible for someone at a mainline carrier for several decades.

Quote:

Originally Posted by NotMrNiceGuy (Post 3192354)

Could you clarify your point here? Clearly other countries are purchasing our debt because it’s backed by the full faith and credit of the US which is built on nothing more than reputation (reputation built over 250 years). We had private savings on the gold standard before we changed standards. What exactly is your point?

Other countries are investing in our risk free treasuries. They are not financing our debt. Our federal debt is comprised of treasuries. Which a lot of retirement funds are also invested in. To eliminate the federal debt (fiat money), that would require an elimination of private savings (fiat money private savers have accumulated.)

That is my point. Fiat money is built on reputation and productivity. That's why hyperinflations occur within countries that have remarkable decreases in productivity.

Thanks! I'll do some digging. A bunch of my money is in Roth, hopefully, that will help.

Quote:

Originally Posted by tnkrdrvr (Post 3192484)

It depends on whether your heirs are inheriting Roth or traditional IRAs. The former is tax free during the ten year withdrawal period, while the latter is taxed as income at the heirs’s income tax bracket. For many, it will be a mixture of both. Unfortunately, it will likely come at time when your children are in their highest earning phases of their lives and therefore pay the most tax on the distributions.

Reuters article talks additional COVID PSP...

Quote:

Originally Posted by Rostov (Post 3191947)

You are in a very small minority that actually believe in cutting Social Security or Medicare. An even smaller minority once you are actively collecting. Posturing is cool and all, but I prefer to be realistic. These programs are not going any where soon, and the sooner we accept that reality the sooner we can better tackle deficit and debt.

I don’t think I said to get rid of them. I know the political reality of that position. What I did say is that dependency creates more dependency. And that EVERYTHING should be cut 1% per year, but even that is impossible in the current political reality until something bad happens. And that the fair tax is the best tax policy, imho.

We made too much to invest in a Roth? Now I know there’s a Roth option but every advisor I’ve spoken to seems to think it’s better to take full advantage of the 401k tax offset rather than the Roth option.

You can roll funds into a Roth and pay the tax now. If you can afford the hellacious tax bill, you can create a giant pile of money to invest tax-free.

My Roth account is up over 10 percent since Jan 1st this year and went gangbusters last. If I can manage another 12-18 years above the sod, I can put a lot of money in my pocket and none in Uncle Sam's.

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Originally Posted by WhisperJet (Post 3192595)

Check out Backdoor and Mega-Backdoor Roth. Plenty of articles online that detail how to do it. They effectively bypass the income limit for Roth IRA contributions.

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Originally Posted by ClncClarence (Post 3192663)

Check out Backdoor and Mega-Backdoor Roth. Plenty of articles online that detail how to do it. They effectively bypass the income limit for Roth IRA contributions.

So basically you need to have a ton of disposable income or cash on hand to foot the tax bill for the rollover?