Value Buy
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Post by Value Buy on Jul 11, 2019 18:56:34 GMT -5
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billisonboard
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Post by billisonboard on Jul 11, 2019 20:44:58 GMT -5
If the parents of college-age children inherit a $500,000 IRA, ..., eviscerating their ability to qualify for need-based financial aid. Yeah.
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Deleted
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Post by Deleted on Jul 12, 2019 7:49:58 GMT -5
If the parents of college-age children inherit a $500,000 IRA, ..., eviscerating their ability to qualify for need-based financial aid. Yeah. You can withdraw from an IRA before retirement age, without penalty, paid to the government through regulation by the IRS ? Or just maybe it's added to your gross income plus a 10% penalty ? Sounds like a situation being created to take someone's money. I noted the OP mentioned tax liability. This in reference to the average age of parents, with college age children.
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billisonboard
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Post by billisonboard on Jul 12, 2019 8:48:52 GMT -5
If the parents of college-age children inherit a $500,000 IRA, ..., eviscerating their ability to qualify for need-based financial aid. Yeah. You can withdraw from an IRA before retirement age, without penalty, paid to the government through regulation by the IRS ? Or just maybe it's added to your gross income plus a 10% penalty ? Sounds like a situation being created to take someone's money. I noted the OP mentioned tax liability. This in reference to the average age of parents, with college age children. Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts?
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happyhoix
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Post by happyhoix on Jul 12, 2019 9:05:18 GMT -5
You can withdraw from an IRA before retirement age, without penalty, paid to the government through regulation by the IRS ? Or just maybe it's added to your gross income plus a 10% penalty ? Sounds like a situation being created to take someone's money. I noted the OP mentioned tax liability. This in reference to the average age of parents, with college age children. Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts? But Bills, the people benefiting from these big inherited IRA accounts are the only ones that matter - the ones who got Trump's big tax cut package.
America exists for such people. The remaining 90% are just here to carry their water.
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Value Buy
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Post by Value Buy on Jul 12, 2019 9:13:23 GMT -5
You can withdraw from an IRA before retirement age, without penalty, paid to the government through regulation by the IRS ? Or just maybe it's added to your gross income plus a 10% penalty ? Sounds like a situation being created to take someone's money. I noted the OP mentioned tax liability. This in reference to the average age of parents, with college age children. Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts? My wife and I both retired in October 2014. Our IRA accounts have grown exponentially since retirement without any additional payments. In our case we have started drawing them down well past the required minimum withdrawls and re-investing some of the money now because we see a high tax bill coming due to other dividend income coming into play as well as minimum withdrawls which create a faster sell off to pay the tax bill in our later years. I know this is a first world problem for some citizens, but the fact is Congress built the IRA system with specific rules and regulations that citizens had to follow. I also realize the 10 percenters were able to hide a lot more money from taxation than Joe sixpack, but that is not my problem. The Roth IRA's look like they are being left out of this takeback, and this is where the real money is right now or will be in future years. Many middle income people were unable to take advantage of the Roth because they had to pay taxes on the investment as they put the money in them and it just was not in the family budget to do it. This legislation was not all about college situations. Someone inheriting a large IRA making say $50,000 a year will also start paying a higher rate of taxation through no fault of their own, and the law was set up where they would not have to do that. The rich people have the ability to pass money to second and third generation relatives with the least tax liabilities. The common people will not have that ability. If a person inherits stocks or certificates of deposits, etc, it is a one time one year hit in higher taxes to the feds, and even then you have hundreds of thousands of ollars that can pass through without a big tax bill. Under this situation it is a ten yr hit at a minimum. It is another expample of middle Americans fgetting screwed.
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Tennesseer
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Post by Tennesseer on Jul 12, 2019 9:16:47 GMT -5
"Common people": Let them eat cake.
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bean29
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Post by bean29 on Jul 12, 2019 9:18:47 GMT -5
Other than the family I work for, I doubt I know too many people that will be passing on 401K or IRA balances in this neighborhood to their children. If someone inherits that kind of $$, I have little sympathy for their heirs having to pay taxes on it, or not qualifying for financial aid. My kids got squat in financial aid anyways. They didn't work for it anyways.
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Value Buy
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Post by Value Buy on Jul 12, 2019 9:20:24 GMT -5
Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts? But Bills, the people benefiting from these big inherited IRA accounts are the only ones that matter - the ones who got Trump's big tax cut package.
America exists for such people. The remaining 90% are just here to carry their water.
I think we all know many of us here do not consider us really rich, and want to leave something to the kids. That is human nature. Right now, whether you want to believe it or not, out IRA's are growing faster than when we were putting funds into the accounts while we were working. We are pulling much more than the minimum requirement the last two years to keeep these accounts at a reasonable level in our later years so we do not have the high tax bill in our last years......yeh, first world problem.......but this is Congress pulling the ole rug out from middle America again. AND BASED ON THE CONGRESSIONAL VOTE....it was not a democrat or republican decision. It was all of them. Another thing, it is all about insurance companies and annuities, or in other words a pay off to Congressional members from big business........
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Deleted
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Post by Deleted on Jul 12, 2019 9:22:42 GMT -5
I still think the end game for IRA's is forced conversions to Roth allowing a person to penalty free use the IRA money for the taxes incurred then several years later moving to a national consumption tax vs income tax.
Retirement funds present a huge opportunity for Congress to go after as our national debt spirals more and more out of control.
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bean29
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Post by bean29 on Jul 12, 2019 9:27:58 GMT -5
The Roth IRA's look like they are being left out of this takeback, and this is where the real money is right now or will be in future years. Many middle income people were unable to take advantage of the Roth because they had to pay taxes on the investment as they put the money in them and it just was not in the family budget to do it. This legislation was not all about college situations. Someone inheriting a large IRA making say $50,000 a year will also start paying a higher rate of taxation through no fault of their own, and the law was set up where they would not have to do that. The rich people have the ability to pass money to second and third generation relatives with the least tax liabilities. The common people will not have that ability. If a person inherits stocks or certificates of deposits, etc, it is a one time one year hit in higher taxes to the feds, and even then you have hundreds of thousands of ollars that can pass through without a big tax bill. Under this situation it is a ten yr hit at a minimum. It is another expample of middle Americans fgetting screwed. Thanks for pointing this out. That puts a different spin on it. Too bad I feel I can't afford to invest in a Roth. But the wealthy people also can convert IRA balances to Roth IRA's by paying the taxes right? I could not come up with the $$ to do that right now, so I don't have that option. I don't even feel I can contribute to a Roth - I need the tax savings rn.
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Value Buy
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Post by Value Buy on Jul 12, 2019 9:35:02 GMT -5
Thanks for pointing this out. That puts a different spin on it. Too bad I feel I can't afford to invest in a Roth. But the wealthy people also can convert IRA balances to Roth IRA's by paying the taxes right? I could not come up with the $$ to do that right now, so I don't have that option. I don't even feel I can contribute to a Roth - I need the tax savings rn. So much this. It has to come out of your original IRA that you are converting if you convert the traditional IRA. If you just start a roth most Americans have trouble paying the tax on the income that you put into it. They are too busy paying bills,peoperty taxes, sales taxes, etc. It is a rich person's game at least until the kids are out of the house on their own.
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Wisconsin Beth
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Post by Wisconsin Beth on Jul 12, 2019 9:38:55 GMT -5
I still think the end game for IRA's is forced conversions to Roth allowing a person to penalty free use the IRA money for the taxes incurred then several years later moving to a national consumption tax vs income tax. Retirement funds present a huge opportunity for Congress to go after as our national debt spirals more and more out of control. Yep. I fully expect the gov't to go after IRAs and other retirement savings. Doesn't mean I'm going to stop saving. I don't know of anyone who inherited more than $20K in IRAs. But I'm 49 and a lot of the folks I know didn't put a ton into IRAs. And didn't do much about allocations/investments so they're not making bank like VB.
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Deleted
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Post by Deleted on Jul 12, 2019 11:52:23 GMT -5
You can withdraw from an IRA before retirement age, without penalty, paid to the government through regulation by the IRS ? Or just maybe it's added to your gross income plus a 10% penalty ? Sounds like a situation being created to take someone's money. I noted the OP mentioned tax liability. This in reference to the average age of parents, with college age children. Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts? Not many, % of population wise.
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Deleted
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Post by Deleted on Jul 12, 2019 11:54:27 GMT -5
Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts? But Bills, the people benefiting from these big inherited IRA accounts are the only ones that matter - the ones who got Trump's big tax cut package.
America exists for such people. The remaining 90% are just here to carry their water.
Only made it to reply #4 on this thread before Trump was inserted. With 4 stereotype premises added. TDS, the bane of intelligent posting.
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Deleted
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Post by Deleted on Jul 12, 2019 11:56:22 GMT -5
"Common people": Let them eat cake. As long as it's strawberry cheesecake !
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Tennesseer
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Post by Tennesseer on Jul 12, 2019 12:47:24 GMT -5
"Common people": Let them eat cake. As long as it's strawberry cheesecake ! Do your food stores carry Junior's New York cheesecake? Ours (Kroger) do. Pretty darn good cheesecake. You can get either simple cheesecake or strawberry swirl cheesecake.
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Deleted
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Post by Deleted on Jul 12, 2019 12:54:00 GMT -5
As long as it's strawberry cheesecake ! Do your food stores carry Junior's New York cheesecake? Ours (Kroger) do. Pretty darn good cheesecake. You can get either simple cheesecake or strawberry swirl cheesecake. We don't have good food like that here in AR. Used to have stuff like that when we lived 15 miles west of Chicago. One of the things I miss after moving back down south.
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Tennesseer
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Post by Tennesseer on Jul 12, 2019 12:57:05 GMT -5
Do your food stores carry Junior's New York cheesecake? Ours (Kroger) do. Pretty darn good cheesecake. You can get either simple cheesecake or strawberry swirl cheesecake. We don't have good food like that here in AR. Used to have stuff like that when we lived 15 miles west of Chicago. One of the things I miss after moving back down south. Well if you have a well known chain food store in your area, check out the frozen food section (deserts) for Junior's cheesecake. they just might carry it. Good stuff.
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Deleted
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Post by Deleted on Jul 12, 2019 13:01:54 GMT -5
We don't have good food like that here in AR. Used to have stuff like that when we lived 15 miles west of Chicago. One of the things I miss after moving back down south. Well if you have a well known chain food store in your area, check out the frozen food section (deserts) for Junior's cheesecake. they just might carry it. Good stuff. No chain stores at all, unless I want to drive 150 miles. I'm still going to check our local stores, thanks !
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teen persuasion
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Post by teen persuasion on Jul 12, 2019 13:02:06 GMT -5
Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts? My wife and I both retired in October 2014. Our IRA accounts have grown exponentially since retirement without any additional payments. In our case we have started drawing them down well past the required minimum withdrawls and re-investing some of the money now because we see a high tax bill coming due to other dividend income coming into play as well as minimum withdrawls which create a faster sell off to pay the tax bill in our later years. I know this is a first world problem for some citizens, but the fact is Congress built the IRA system with specific rules and regulations that citizens had to follow. I also realize the 10 percenters were able to hide a lot more money from taxation than Joe sixpack, but that is not my problem. The Roth IRA's look like they are being left out of this takeback, and this is where the real money is right now or will be in future years. Many middle income people were unable to take advantage of the Roth because they had to pay taxes on the investment as they put the money in them and it just was not in the family budget to do it. This legislation was not all about college situations. Someone inheriting a large IRA making say $50,000 a year will also start paying a higher rate of taxation through no fault of their own, and the law was set up where they would not have to do that. The rich people have the ability to pass money to second and third generation relatives with the least tax liabilities. The common people will not have that ability. If a person inherits stocks or certificates of deposits, etc, it is a one time one year hit in higher taxes to the feds, and even then you have hundreds of thousands of ollars that can pass through without a big tax bill. Under this situation it is a ten yr hit at a minimum. It is another expample of middle Americans fgetting screwed. I thought taxable investments got a step-up in basis when you inherit them.
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teen persuasion
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Post by teen persuasion on Jul 12, 2019 13:15:45 GMT -5
I think we all know many of us here do not consider us really rich, and want to leave something to the kids. That is human nature. Right now, whether you want to believe it or not, out IRA's are growing faster than when we were putting funds into the accounts while we were working. We are pulling much more than the minimum requirement the last two years to keeep these accounts at a reasonable level in our later years so we do not have the high tax bill in our last years......yeh, first world problem.......but this is Congress pulling the ole rug out from middle America again. AND BASED ON THE CONGRESSIONAL VOTE....it was not a democrat or republican decision. It was all of them. Another thing, it is all about insurance companies and annuities, or in other words a pay off to Congressional members from big business........This is the big part I object to. This is a big present to the annuity companies. Aren't the annuity companies the biggest drawback to the 403b plans for teachers? Now congress wants to foist that on everyone else, too? How many uninformed people will get pushed into expensive annuities unsuited to their situations, because, Yea!, the govt added this option, it must be important!
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Deleted
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Post by Deleted on Jul 12, 2019 13:22:50 GMT -5
I think we all know many of us here do not consider us really rich, and want to leave something to the kids. That is human nature. Right now, whether you want to believe it or not, out IRA's are growing faster than when we were putting funds into the accounts while we were working. We are pulling much more than the minimum requirement the last two years to keeep these accounts at a reasonable level in our later years so we do not have the high tax bill in our last years......yeh, first world problem.......but this is Congress pulling the ole rug out from middle America again. AND BASED ON THE CONGRESSIONAL VOTE....it was not a democrat or republican decision. It was all of them. Another thing, it is all about insurance companies and annuities, or in other words a pay off to Congressional members from big business........This is the big part I object to. This is a big present to the annuity companies. Aren't the annuity companies the biggest drawback to the 403b plans for teachers? Now congress wants to foist that on everyone else, too? How many uninformed people will get pushed into expensive annuities unsuited to their situations, because, Yea!, the govt added this option, it must be important! Don't be uninformed. Annuities are a contract, read, comprehend. You are being 'pushed' into nothing.
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billisonboard
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Post by billisonboard on Jul 12, 2019 14:48:24 GMT -5
Did you note that the article linked in the OP was talking about inherited IRA accounts? And the examples are $1,000,000 and $500,000 IRA accounts inherited, i.e. money that one generation set aside for retirement in a government created program and did not use during their retired years. Wonder how many people are inheriting that amount of money from those accounts? Not many, % of population wise. But be afraid anyway ... It affects so many people in a very negative way, via tax liabliites. "Congress is coming for your IRA"
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happyhoix
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Post by happyhoix on Jul 12, 2019 15:17:51 GMT -5
But Bills, the people benefiting from these big inherited IRA accounts are the only ones that matter - the ones who got Trump's big tax cut package.
America exists for such people. The remaining 90% are just here to carry their water.
I think we all know many of us here do not consider us really rich, and want to leave something to the kids. That is human nature. Right now, whether you want to believe it or not, out IRA's are growing faster than when we were putting funds into the accounts while we were working. We are pulling much more than the minimum requirement the last two years to keeep these accounts at a reasonable level in our later years so we do not have the high tax bill in our last years......yeh, first world problem.......but this is Congress pulling the ole rug out from middle America again. AND BASED ON THE CONGRESSIONAL VOTE....it was not a democrat or republican decision. It was all of them. Another thing, it is all about insurance companies and annuities, or in other words a pay off to Congressional members from big business........ My mom had a nice nest egg of about 400K when she had a stroke and dementia set in.
Spent 5 years living in an assisted living facility and died with less than 80K to her name, divided between 3 heirs. With Alzheimers and healthcare costs both increasing, this will be the fate of a lot of the middle class nest eggs you're talking about.
Who will be able to pay their end of life living expenses and medical bills and still have enough money to leave 500K IRA's to their kids? Not a big number of middle class families.
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Tiny
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Post by Tiny on Jul 12, 2019 22:29:06 GMT -5
Should a $1 million IRA pass to a high-earning adult daughter, at best she would have to take payouts adding $100,000 of annual income on top of her salary for a decade. If she lives in a high-tax state, half the annual payout’s value could be lost to taxes.
Oh poor baby... I'm sure her parents or even herself can find a way to shelter as much of that money as is possible. If the kid and her parents aren't bright enough to have figured out how to handle their "wealth" - I gotta wonder how they were bright enough to build the wealth.
I'm so sorry the wealthy will have to spend even more time figuring out how best to protect their wealth - since the more or less "freebie" that was the "IRA" might not be such a freebie...
That was one of the "nice" things about IRAs/401Ks - They helped the people with money get more money AND keep more money - with a small side effect that the not so wealthy could also take advantage of "investing" without a big amount of money to start with.
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Gardening Grandma
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Post by Gardening Grandma on Jul 12, 2019 22:42:24 GMT -5
I think we all know many of us here do not consider us really rich, and want to leave something to the kids. That is human nature. Right now, whether you want to believe it or not, out IRA's are growing faster than when we were putting funds into the accounts while we were working. We are pulling much more than the minimum requirement the last two years to keeep these accounts at a reasonable level in our later years so we do not have the high tax bill in our last years......yeh, first world problem.......but this is Congress pulling the ole rug out from middle America again. AND BASED ON THE CONGRESSIONAL VOTE....it was not a democrat or republican decision. It was all of them. Another thing, it is all about insurance companies and annuities, or in other words a pay off to Congressional members from big business........ My mom had a nice nest egg of about 400K when she had a stroke and dementia set in.
Spent 5 years living in an assisted living facility and died with less than 80K to her name, divided between 3 heirs. With Alzheimers and healthcare costs both increasing, this will be the fate of a lot of the middle class nest eggs you're talking about.
Who will be able to pay their end of life living expenses and medical bills and still have enough money to leave 500K IRA's to their kids? Not a big number of middle class families. Only the 1%ers. I just can’t get my undies in a twist worrying about them
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tallguy
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Post by tallguy on Jul 12, 2019 23:23:42 GMT -5
My wife and I both retired in October 2014. Our IRA accounts have grown exponentially since retirement without any additional payments. In our case we have started drawing them down well past the required minimum withdrawls and re-investing some of the money now because we see a high tax bill coming due to other dividend income coming into play as well as minimum withdrawls which create a faster sell off to pay the tax bill in our later years. I know this is a first world problem for some citizens, but the fact is Congress built the IRA system with specific rules and regulations that citizens had to follow. I also realize the 10 percenters were able to hide a lot more money from taxation than Joe sixpack, but that is not my problem. The Roth IRA's look like they are being left out of this takeback, and this is where the real money is right now or will be in future years. Many middle income people were unable to take advantage of the Roth because they had to pay taxes on the investment as they put the money in them and it just was not in the family budget to do it. This legislation was not all about college situations. Someone inheriting a large IRA making say $50,000 a year will also start paying a higher rate of taxation through no fault of their own, and the law was set up where they would not have to do that. The rich people have the ability to pass money to second and third generation relatives with the least tax liabilities. The common people will not have that ability. If a person inherits stocks or certificates of deposits, etc, it is a one time one year hit in higher taxes to the feds, and even then you have hundreds of thousands of ollars that can pass through without a big tax bill. Under this situation it is a ten yr hit at a minimum. It is another expample of middle Americans fgetting screwed. I thought taxable investments got a step-up in basis when you inherit them. They do. The earlier discussion bolded here was, for the most part, wrong. If the heirs sell the stock, CDs, etc. immediately there is no capital gains tax due. If they wait, they pay tax only on the gains after they receive the inheritance. Even then, they may not be liable for tax at all depending on income. Death is the greatest legal tax-avoidance scheme we have.
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Tiny
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Post by Tiny on Jul 12, 2019 23:25:40 GMT -5
Thanks for pointing this out. That puts a different spin on it. Too bad I feel I can't afford to invest in a Roth. But the wealthy people also can convert IRA balances to Roth IRA's by paying the taxes right? I could not come up with the $$ to do that right now, so I don't have that option. I don't even feel I can contribute to a Roth - I need the tax savings rn. So much this. It has to come out of your original IRA that you are converting if you convert the traditional IRA. If you just start a roth most Americans have trouble paying the tax on the income that you put into it. They are too busy paying bills,peoperty taxes, sales taxes, etc.It is a rich person's game at least until the kids are out of the house on their own.That doesn't seem to make sense...If I have 200 a month to put in a roth OR to put towards property taxes OR to let sit in my checking account - I've paid the same "payroll" taxes on it. Depending on my income - it might not matter much in the big picture weather I put that $200 a month in a Roth or in a Traditional IRA. And since you are talking about a married couple with kids - they already got some tax advantages - so they'd probably be better off long term putting that $200 in a Roth -but a Traditional IRA would work OK too. I guess I'm wondering who you think "middle America" is? Households with 250K income or households with the Median Income between 50 and 80K? Those income numbers make a tax difference.
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Tiny
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Post by Tiny on Jul 12, 2019 23:32:15 GMT -5
The other thing is RMDs... someone with the 1mil IRA who lives long enough will have to deal with the tax implications of those RMD withdrawals. The owner of the IRA has issues no matter what and in theory someone who's been savvy enough to get to that kind of money should be savvy enough to figure out/plan to keep as much of their money as they can - even if they die before the RMDs begin - I would think they were giving some thought to their money.
Cause right now, I'm feeling really pissy about how now that I've gotten a big o' pile of $$ - it sucks up alot of my time and thought maintaining it. It's a good thing... but I just thought that "having enough money" meant you didn't have to think about the damn stuff so much. Having enough money just means you have to think MORE about it. And yes, it's a first world problem.
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