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Thread: For you old guys

  1. #1
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    For you old guys

    When I became 70-1/2 and had to begin drawing down my 401 and IRA I tried to calculate the required minimum disbursement (RMD) myself---and found it cloaked in a mythical bureaucratic cloud of fog---I gave up and referred the calculation to my accountant.

    I am trying to do planning for the remainder of the year and wanting to know the current RMD for both my wife and I and unwilling to wait for the answer from my accountant---I gave it another shot---and what do you know--- it is now a cake walk. That link is good if your spouse is less than 10 years your junior, if greater than that there is another chart.

    Happy planning
    "A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty” ---Sir Winston Churchill
    "Political extremism involves two prime ingredients: an excessively simple diagnosis of the world's ills, and a conviction that there are identifiable villains back of it all." ---John W. Gardner
    “You can’t go back and change the beginning, but you can start where you are and change the ending.” ---C. S. Lewis

  2. #2
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    Who you callin' old?......Ben
    The future is forged on the anvil of history...The interpreter of history wields the hammer... - Unknown author...

  3. #3
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    Just old guys that read it.

  4. #4
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    Oh, us old guys then...Just checking......Ben
    The future is forged on the anvil of history...The interpreter of history wields the hammer... - Unknown author...

  5. #5
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    Quote Originally Posted by Truckman View Post
    Oh, us old guys then...Just checking......Ben
    I'm surprised you remembered to come back to check the thread.
    The only way of discovering the limits of the possible is to venture a little way past them into the impossible - Arthur C. Clarke

  6. #6
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    Quote Originally Posted by Mike View Post
    I'm surprised you remembered to come back to check the thread.
    Have we met?......Ben
    The future is forged on the anvil of history...The interpreter of history wields the hammer... - Unknown author...

  7. #7
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    One word of caution in your planning---the number you will get from the calculation is gross---you need to correct for taxes due.
    "A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty” ---Sir Winston Churchill
    "Political extremism involves two prime ingredients: an excessively simple diagnosis of the world's ills, and a conviction that there are identifiable villains back of it all." ---John W. Gardner
    “You can’t go back and change the beginning, but you can start where you are and change the ending.” ---C. S. Lewis

  8. #8
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    And now---for the rest of this story---forget it! This is a nonissue for 2020.

    I sent my accountant a note yesterday asking for the best time (based on dividend payments) to minimize impact on the principle. And this is his response

    Due to the Pandemic, there are no required distributions for 2020.
    "A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty” ---Sir Winston Churchill
    "Political extremism involves two prime ingredients: an excessively simple diagnosis of the world's ills, and a conviction that there are identifiable villains back of it all." ---John W. Gardner
    “You can’t go back and change the beginning, but you can start where you are and change the ending.” ---C. S. Lewis

  9. #9
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    Bell System began the precursor to 401k in x1976.. you contributed $20.00 and they kicked in $10.00 a week.. it was post tax.. later it was rolled into the pre-tax plan ..

    When they established the pre-tax plan the explained that it was not tax free, it was a tax deferral..

    Fast forward 30 years.. now at age 70 1/2 and it’s time to “face the music “.. that deferred tax sure seems to be a lot more $$$ than we envisioned ..

  10. #10
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    I have mentioned this "reversal" in the past.

    The entire concept was, I believe, well meaning and certainly seemed to me to be a beneficial program--and in fact might have been if my life had followed the "norm". First, I have to add a caveat, I have never tried to figure out the value of my employer contributions which would not have happened had I not been enrolled.

    My problem, unseen when I was 50, was that I continued to work past my max age before withdrawals. The basic concept, when developed, was that as you began to draw on that account and taxes had to be paid on those withdrawals your income would be much less than when that money was earned and thus would be an overall net tax savings. In addition, you cannot ignore the fact that those savings coming in without taxes grow (hopefully) from a higher base than if you were investing after tax dollars.

    My case simply did not fit the norm foreseen by this program. In retrospect I would have been better off to pay the taxes when earned and invested this money in more conventional and less restricted accounts. But---that is the clarity offered by hindsight---something I am far more gifted of than clearly seeing the future.

    In the final analysis, I am not sure who was core to implementing this program---but I think their hearts were in the right place and for that I thank them. I also would hope that most people follow the norm and ultimately benefit from this program.

    The revelation of 2020 from my accountant was greeted with some relief----I had no need for the money----but do rejoice in significant tax savings for 2020!
    "A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty” ---Sir Winston Churchill
    "Political extremism involves two prime ingredients: an excessively simple diagnosis of the world's ills, and a conviction that there are identifiable villains back of it all." ---John W. Gardner
    “You can’t go back and change the beginning, but you can start where you are and change the ending.” ---C. S. Lewis

  11. #11
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    I believe that one can save taxes by making one’s charitable contributions from the IRA.. and not be taxed on the withdrawal.. after I retired and started my second career, I only contributed the amounts that were employer matched.. everything else was post tax..

  12. #12
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    Quote Originally Posted by Sandman View Post
    I believe that one can save taxes by making one’s charitable contributions from the IRA.. and not be taxed on the withdrawal.. after I retired and started my second career, I only contributed the amounts that were employer matched.. everything else was post tax..
    It is not actually a savings--more like an early return. If you take the taxed money and then donate it you get the deduction at tax time.
    "A pessimist sees the difficulty in every opportunity, an optimist sees the opportunity in every difficulty” ---Sir Winston Churchill
    "Political extremism involves two prime ingredients: an excessively simple diagnosis of the world's ills, and a conviction that there are identifiable villains back of it all." ---John W. Gardner
    “You can’t go back and change the beginning, but you can start where you are and change the ending.” ---C. S. Lewis

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