How are your investments doing?

[Torvy]

^not really, for many of us. RMD wasn't a thing until 1986. The contract is simply that we pay taxes on those funds upon withdrawal. Forced withdrawals wasn't part of the deal.

 

[LittleBittyBigJohn]

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

We only got the Roth option on 401K a few years ago at my place of employment. I changed all my contributions to go that way about as soon as it became available. But sadly, most of mine is in traditional.

 

[CH4Ohio]

In my humble opinion, having too much RMD money, is a good problem to have, compared to the many people without enough money

I agree that it can be a bit of a shock when you see the numbers. Has been for me. But, as you say, it's not the worst problem you could have to deal with.

 

[CH4Ohio]

^not really, for many of us. RMD wasn't a thing until 1986. The contract is simply that we pay taxes on those funds upon withdrawal. Forced withdrawals wasn't part of the deal.

So you've been concerned about this for 40 years now?

 

[Torvy]

I've been concerned about my retirement plan for at least that long.

To combat some of the overreach, we retired early and withdraw a smaller amount that keeps us in the lower tax brackets on those funds. That should help keep forced withdrawals to smaller amounts.

RMDs are a horrible policy in general.

 

[CH4Ohio]

RMDs are a horrible policy in general.

I'm no tax expert, but seems like the alternative would be to let it accumulate until death when your estate pays the highest possible tax rate on the entire balance (37% currently, I believe) in one final distribution. Painful as it is, I know I can do better than that.

 

[MossRoad]

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?

Go big or go home....

 

[jmc]

Another thing about delaying income taxes until withdrawals in retirement is those delayed taxes are compounding for decades on your behalf instead of being syphoned off in real time.

 

[Torvy]

I'm no tax expert, but seems like the alternative would be to let it accumulate until death when your estate pays the highest possible tax rate on the entire balance (37% currently, I believe) in one final distribution. Painful as it is, I know I can do better than that.

Two bad policies don't equal one good one.

Leaving it up to the individual is better.

Also, up to 40%, but the exemption threshold is $13.99 Million.

Most of us don't have estates in that range. Either way, I oppose all estate taxes and the RMD.

 

[jmc]

Go big or go home....

Saw one of these near my parents' grave. An engraving of a solitary cabin overlooking a lake. Guy in a boat has a large fish on, jumping out of the lake while a large buck nearby looks on.