How are your investments doing?

[zzvyb6]

Terrible. My RMD Uniform Lifetime table number is 23. I'm making more money than they require me to take out so my IRA is still increasing despite the RMD. Thus I keep jumping tax brackets. I'm lost as to what I should buy: New Cab tractor (I want one with a self leveling loader), solar panels for the barn, or how about some land for a data center ???

My advisor told me point blank: "You saved too much money".

 

[Torvy]

Terrible. My RMD Uniform Lifetime table number is 23. I'm making more money than they require me to take out so my IRA is still increasing despite the RMD. Thus I keep jumping tax brackets. I'm lost as to what I should buy: New Cab tractor (I want one with a self leveling loader), solar panels for the barn, or how about some land for a data center ???

My advisor told me point blank: "You saved too much money".

Better idea. We need to eliminate RMD. It's none of their business if I save money for my progeny, or a charity, or for them to sort out when I die.

 

[deserteagle71]

Better idea. We need to eliminate RMD. It's none of their business

^This!

 

[CH4Ohio]

Better idea. We need to eliminate RMD. It's none of their business if I save money for my progeny, or a charity, or for them to sort out when I die.

Remember. The RMD is the result of saving money BEFORE taxes. The original deal was that you could lower your tax bracket while working and save money without paying income tax on that money. The flip-side of that decision is that you pay those taxes at some point so you have to start taking distributions (Required Minimum Distributions) before you die and start paying the taxes. Nothing says you have to “spend” the money. Simply withdraw, pay the taxes, and reinvest the “after-tax” money if that’s best for you.

I get it. No one likes taxes. But RMDs are the result of a decision WE made years ago when we were focused on the early stages of this saving journey.

(Reminds me of a saying about death and taxes …)

 

[DarkBlack]

Simply withdraw, pay the taxes, and reinvest the “after-tax” money if that’s best for you.

 

[steve tym]

My finance guys says if I stay on the track I'm on, I'll die with 4 mil in the bank. Why do I want to do that?

 

[Quaffer]

Remember. The RMD is the result of saving money BEFORE taxes. The original deal was that you could lower your tax bracket while working and save money without paying income tax on that money. The flip-side of that decision is that you pay those taxes at some point so you have to start taking distributions (Required Minimum Distributions) before you die and start paying the taxes. Nothing says you have to “spend” the money. Simply withdraw, pay the taxes, and reinvest the “after-tax” money if that’s best for you.

If your RMD withdrawals are sizeable enough, you not only pay tax you deferred earlier, but also get penalized by having itemized deductions eliminated, and Medicare premiums double, triple, or nearly quadruple. There's no free lunch ... the taxation punishment kicks in pretty good at $150k annual income but doesn't stop there. The level of tax punishment keeps rising as income rises above that ....

 

[CH4Ohio]

If your RMD withdrawals are sizeable enough, you not only pay tax you deferred earlier, but also get penalized by having itemized deductions eliminated, and Medicare premiums double, triple, or nearly quadruple. There's no free lunch ... the taxation punishment kicks in pretty good at $150k annual income but doesn't stop there. The level of tax punishment keeps rising as income rises above that ....

I get it. Simply pointing out that we could have saved our money in our 401K or IRA AFTER TAXES if we had chosen to. Later when Roth accounts became available, I (we) could have chosen to pay current taxes and contribute 100% to a ROTH account.

At the time, I (like many others) decided to save most of my contributions BEFORE TAX. I entered into that agreement knowing that I'd have to pay taxes on it later and would be forced to take distributions. That seemed like the right thing to do at the time and I entered into that "contract" freely.

I think the government is at fault for most of the problems in our world. Just can't blame "them" for our RMD situations.

 

[CloverKnollFarms]

Most of our retirement is in ROTH IRAs and ROTH 401K.

 

[DarkBlack]

I get it. Simply pointing out that we could have saved our money in our 401K or IRA AFTER TAXES if we had chosen to. Later when Roth accounts became available, I (we) could have chosen to pay current taxes and contribute 100% to a ROTH account.

At the time, I (like many others) decided to save most of my contributions BEFORE TAX. I entered into that agreement knowing that I'd have to pay taxes on it later and would be forced to take distributions. That seemed like the right thing to do at the time and I entered into that "contract" freely.

I think the government is at fault for most of the problems in our world. Just can't blame "them" for our RMD situations.

Like you said, RMD doesn’t mean you have to spend the money. You effectively just have to account for taxes on it, at minimum.
Some brokerages even provide simple 2 or 3 clicks setups, to transfer your RMD investment choices to the same investments , within their taxable account.
To you, you are still invested in the same investments in the same brokerage, you just will have it reported as income on your taxes.
In my humble opinion, having too much RMD money, is a good problem to have, compared to the many people without enough money