Posted on 01/28/2020 8:16:41 AM PST by ProtectOurFreedom
President Trump signed the SECURE Act this week (January 8, 2020) as part of the government’s spending bill and it will inevitably affect most retirement savers, for better or worse.
The SECURE legislation — which stands for “Setting Every Community Up for Retirement Enhancement” — puts into place numerous provisions intended to strengthen retirement security across the country.
Part of the bill addresses the grim outlook for many workers who don’t have access to workplace retirement accounts.
It offers small businesses tax incentives to set up automatic enrollment in retirement plans for its workers, or allows them to join multiple employer plans, where they can band together with other companies to offer retirement accounts to their employees in the first place. The bill also eliminates the maximum age cap for contributions to traditional individual retirement accounts.
(Excerpt) Read more at marketwatch.com ...
It was not intended to be rolled over into a retirement plan for future generations.
Yes, your kids will pay taxes on it, at their rate, over a period of 10 years. But it was free money to them, and it was never taxed before.
Whoa, Wayne, STOP!
You are making too much sense.
I've been a big believer {and user of IRAs} but my gripe has always been with the confiscation of my SS and Medicade money.
Years ago, I did a present value lump sum payment calculation using 3%, 5% and 7% as the rate of return, on my money taken by the Feds when I retired.
At 3%, I would have gotten $3.4 Million, at 5% it was a little over $5.4 Million and I didn't want to run the 7% number.
Instead, the feds "GIVE ME" a couple of grand a month and take back about 8% for medicare.
Every time I think about that theft of my money, I get pissed.
The amount of direct income, state and every other tax I've paid over a lifetime, makes me ill, but, it's still the best country in the world.
I've been all over the world and this is the best country ... ever.
Long anecdotal story warning:
I had a bunch of money in my IRA (about $350K) was over 59.5, and my wife got sick - badly sick. One kid in college, mortgage, and a second mortgage to pay junior’s tuition. The loss of her paycheck plus the medical bills was a strain. My retirement strategy was always to sell the California “mansion” and buy rental property in Texas.
Well, re-examining that strategy made me realize:
1) I needed an additional source of income - now.
2) Purchasing homes, fixing them up, and renting them in another state is a whole new business. A business I have no experience in. If I wait until I’m retired to do that, I’ll be making mistakes with no paycheck coming in. That’s the worst time to try to learn.
3). If I wait until I’m retired to pull money out of my IRA, then I need additional IRA to pay the income taxes on the money I just pulled out. If I do this while I’m employed, I can squeeze my paycheck to pay the taxes.
4) There is no such thing as retirement - only a transition to less work and less money. Plan, so that work will be what you always wanted to do!
So, my story is - if you don’t have enough money in your IRA/401K to live off the interest (and who does?), you will need to invest it to get income. That income (and SSA) is what you will live off. Transition to that business while you still have a paycheck coming in.
BTW, the love of my life survived, and is back to 95%.
I’ve been drawing minimum distributions on an inherited IRA for over ten years. Does the new 10 year period begin now, or will I need to withdraw all of the remaining $ next year?
That extremely stupid “SECURE” name caused me to have the same reaction. As soon as I see something like that or “Affordable” in the name of a bill I grab my wallet. Then they grab my ankles, turn me upside down, and shake me until I drop it.
Eff all of those rotten bastards. I am SO disappointed Trump signed this theft bill.
Really, AC? You don’t trust Congress to not screw you in the future? My, you are a suspicious sort.
“It was not intended to be rolled over into a retirement plan for future generations.”
That may have been the intention, but the law wasn’t written that way. It was about the only small break the small guy got to help out his progeny in life.
It doesn’t change the fact that those bastards have drastically scaled back the value of that break to our kids.
I could always make withdrawals of my IRA during my lifetime and gift it to my kids, who could invest it for their retirement.
Or I could put it into a Life Insurance policy or Variable Life insurance policy. No tax on Life Insurance, but with a Variable policy, the money is still accessible, if needed for nursing home expenses etc.
Good question. You should check with the fund manager or your tax planning attorney.
The best strategy now for passing qualified assets is to use a ROTH rather than a traditional IRA.
It might piss me off as well, but when I started working over 40 years ago I knew then that sooner or later SS was going to be worthless, so all my retirement planning since then has been under the assumption that SS would not be there anyway. As it turns out, if you have your retirements in the right buckets, you can withdraw it without it counting as 'income' against your SS. So now I actually will get some and that also covers the Medicare premiums. I highly recommend talking with retirement planners to see how this game is worked to your advantage.
Agreed. Its also the best strategy for minimizing total tax over life. People started using IRA’s decades ago with the idea that their retirement income would be lower than their working income, thus taxed at a lower rate. But if you have amassed a large nest egg, ones retirement income can soon exceed your working income due to mandatory withdrawals. Roth’s protect against that as they are tax payed up front and tax free on withdrawal.
“...Eff all of those rotten bastards.....”
Yep. you ain’t alone with that thought...LOL
What gets me is that they didn’t take of the risks, or do the hard work, or make any of the sacrifices to make/save any of that money. Yet, they think it’s theirs and with the slight of the hand and a pen, they can just take it. Actually it’s nothing but “legalized theft”. Whoever came up with the evil idea of taxing the labor of a man’s hand has got to have very special place in hell.
Whoever he/she/they were, I hope they burn..... and burn reaaaalllll good.
I have found this to be a D.C. truism.
The cuter the anacronym, the more destructive the legislation.
A general rule is you can safely withdraw 4% of your capital every year. So you have the 1) investment returns / dividends / interest plus 2) SS plus 3) your capital draw-down.
What I hate about these articles is that they never give the Bill number. Tried on Thomas to find it. A list of 800+ bills comes up.
It does not fly under the radar screen, it is disguised. The politicians are also clueless or less aware than we are. I direct your attention to all the spinators who act as though they are hearing the truth and evidence in favor of Trump for the very first time, because they are.
Being smart is not required to be a politician.
I found:
• Securing Our Children Act of 2019
• Securing American Nonprofit Organizations Against Terrorism Act of 2019
• Secure Travel Partnership Act of 2019
• To extend the Secure Rural Schools and Community Self-Determination Act of 2000.
• A bill to extend the Secure Rural Schools and Community Self-Determination Act of 2000.
• SECURE Firearm Storage Act
• Protecting and Securing Florida's Coastline Act of 2019
And lots more. Those people sure do a lot of "securing" for us, don't they?
I was worried about that so I didn’t do Roth, but I’m 60 now, and my taxes are a lot higher than they were back in the day, so now I wish I had done all ROTH, because if I got scared about the government changing the rules, I could pull my entire account out without penalty and invest it normally at this point in my life.
Not doing ROTH was probably my biggest mistake, because now all my retirement calculations have to include some hefty taxes.
You’re probably one of the pretty rare cases where someone is in a higher income tax bracket in retirement than they were during their peak earning years, no?
It didn’t help that my wife died; if I get re-married, my taxes will be a bit better.
My kids have also just been dropping off, my daughter 2 years ago, and my son probably this year because while he is still in school, he’s got a decent internship so he’ll probably save money doing his own taxes and taking his own deductions.
I think the key to my tax saving retirement is to get married again.
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