No. of Recommendations: 3
Print the post Back To Top
No. of Recommendations: 6
These days, passing the House and passing the Senate are quite different things ... not to mention getting a Presidential signature.
Print the post Back To Top
No. of Recommendations: 1
These days, passing the House and passing the Senate are quite different things ... not to mention getting a Presidential signature.

The link was behind a paywall on my computer, but Apple news on the iPhone brought up the story. There's a Senate bill that is expected to pass, then who knows what happens in reconciliation. And that's before it gets to the president's desk, where it's anyone's guess what happens.

So, the news is that Congress is working on changes to loosen up the RMDs. It will be a while before we know if anything will happen.
Print the post Back To Top
No. of Recommendations: 4
The latest info I've read on this is from ThinkAdvisor. There is a house version that increases the RMD year to 72 and a Senate version increasing it to 75. There are other provisions for making it easier to use insurance products in an IRA. Collective Investment Trusts in a 403(b), make student loan payments through their retirement plan at work, qualified charitable distributions for employer retirement plans, and other smaller stuff.

The HR is set for committee vote today I believe.

The President said he would generally support this final bill.

https://www.thinkadvisor.com/2019/05/14/new-retirement-bill-...

BruceM
Print the post Back To Top
No. of Recommendations: 0
Personally I'm not going to be concerned until it get closer to being law but I am wondering if a change is made will that change the RMD percentages? I'm thinking not since it doesn't change life expediencies. Does anyone have a different thought?
Print the post Back To Top
No. of Recommendations: 3
The latest info I've read on this is from ThinkAdvisor. There is a house version that increases the RMD year to 72 and a Senate version increasing it to 75.

The Thinkadvisor article is from May 14 - 10 days ago. According to articles from yesterday and today (one example: https://www.chicagotribune.com/business/ct-biz-secure-retire... - if you have a subscription, the WSJ also had articles), the Senators backing the Senate version (RESA act) are now speaking out in favor of the House version (SECURE Act) so it seems more likely that the House version will prevail.

AJ
Print the post Back To Top
No. of Recommendations: 2
Personally I'm not going to be concerned until it get closer to being law but I am wondering if a change is made will that change the RMD percentages? I'm thinking not since it doesn't change life expediencies. Does anyone have a different thought?

Since the RMDs are based on life expectancy, I doubt the percentage requirements will change by age. Waiting until age 72 would increase the initial RMD percentage required to 3.91% from 3.65% or 3.77%, depending on when during the year you turned 70 1/2.

What will change the RMD percentages by age is the current trend of decreasing life expectancy in the US. If this trend continues, the RMD percentages will increase for each age.

AJ
Print the post Back To Top
No. of Recommendations: 0
CABob asks,

Personally I'm not going to be concerned until it get closer to being law but I am wondering if a change is made will that change the RMD percentages? I'm thinking not since it doesn't change life expediencies. Does anyone have a different thought?

</snip>


The percentages in the RMD are based on the IRS mortality table which is updated once every 10 years. It doesn't change by very much.

https://www.shrm.org/resourcesandtools/hr-topics/benefits/pa...

intercst
Print the post Back To Top
No. of Recommendations: 1
It makes sense on two levels:
-During my lifetime, my Full Retirement Age changed from 65 to 67 to reflect increased longevity. (True or not, that's the stated reason.) Why shouldn't RMDs be subjected to the same logic?
-What the heck is it with these half-birthdays? Let's let stuff make more sense and apply to your real age, not half year after.
Print the post Back To Top
No. of Recommendations: 5
Since the RMDs are based on life expectancy, I doubt the percentage requirements will change by age.

From the above article...

"The Portman-Cardin bill phases in the RMD age increase over several years and would update mortality tables to reflect longer life expectancies."

If you think about it, it would make little sense to raise the RMD age without an actuarial adjustment for current life expectancy to this age group. The most recent update to the Uniform Table was April 2002 when, according to Howard Gleckman, senior writer for Forbes, life expectancy was 1 year less than today.

What will change the RMD percentages by age is the current trend of decreasing life expectancy in the US

This decrease, which the media has been all over of late, is due primarily to increases in drug overdoses (primarily opioids) and suicides in the 25-34 year age group. Life expectancy for those 70 and older has continued to increase, due primarily to advances in diagnostic medical procedures.

https://healthmetrics.heart.org/us-life-expectancy-drops-for...

BruceM
Print the post Back To Top
No. of Recommendations: 14
If you think about it, it would make little sense to raise the RMD age without an actuarial adjustment for current life expectancy to this age group.

It's Congress. Congress makes laws, not sense.

AJ
Print the post Back To Top
No. of Recommendations: 0
If you think about it, it would make little sense to raise the RMD age without an actuarial adjustment for current life expectancy to this age group.

The IRS' Uniform Lifetime Table III doesn't need any adjustment as it is designed to accommodate the fraction of the population that could live to 115.
Print the post Back To Top
No. of Recommendations: 2
The IRS' Uniform Lifetime Table III doesn't need any adjustment as it is designed to accommodate the fraction of the population that could live to 115.

Except that they're only loosely based on actuarial science. The committees that put together the tables may have started with the science, but the end result is all from political negotiations and compromises.

So it should be no surprise that the tables occasionally get changed based on the current political landscape. And maybe a little science - when the science aligns with the current political will.

--Peter
Print the post Back To Top
No. of Recommendations: 0
Except that they're only loosely based on actuarial science. The committees that put together the tables may have started with the science, but the end result is all from political negotiations and compromises.

So it should be no surprise that the tables occasionally get changed based on the current political landscape. And maybe a little science - when the science aligns with the current political will.


The Uniform Lifetime Table III hasn't been changed since it was implemented in 2002. It seems unlikely that the table would be changed unless there is some dramatic shift in human life spans.

At age 70, the Uniform Lifetime Table III assumes that you will live to the age of 97.4. What percentage of 70 year olds will live to that age when 50% of that population is expected to die in 14.40 years?
Print the post Back To Top
No. of Recommendations: 2
MCCrockett asks,

At age 70, the Uniform Lifetime Table III assumes that you will live to the age of 97.4. What percentage of 70 year olds will live to that age when 50% of that population is expected to die in 14.40 years?

</snip>


With rising life expectancy among higher income folks, I bet more than 5% make it to 97.4 years. The fastest growing segment of the population is centenarians.

https://www.nydailynews.com/life-style/centenarians-fastest-...

http://www.retireearlyhomepage.com/lesafe.html

intercst
Print the post Back To Top
No. of Recommendations: 3
Some time ago I announced my goal to live to 100. Guess that is not all that exceptional nowadays.

We have applied to move to a Continuing Care Retirement Community in Carlsbad. There was a three year waiting list at the time we applied. We are advised that they are telling new applicants it's up to 4 years now. https://carlsbadbythesea.org/

When we took their tour the lady stopped to introduce us to one of the residents. It was his birthday: 100 years. She said they had two other centenarians and they were having a party for them. (I don't know how many residents there are - at least a couple of hundred.)

It is interesting to me that there is a wait to get an apartment. They are not inexpensive.

CNC
Print the post Back To Top
No. of Recommendations: 0
Well if there is a heat wave, massive power outage and their generator goes out, the waiting list should winnow down.

Extreme temperature changes and of course, rampant flu and pneumonia outbreaks in facilities seem to increase the mortality rate.

I know, it’s morbid, but it’s been my observation.

LD
Print the post Back To Top
No. of Recommendations: 2
Well if there is a heat wave, massive power outage and their generator goes out, the waiting list should winnow down.

Extreme temperature changes and of course, rampant flu and pneumonia outbreaks in facilities seem to increase the mortality rate.

I know, it’s morbid, but it’s been my observation.

LD


Interesting conjecture. I wonder if the management can require everyone to have flu and pneumonia shots? Likely. Also, these are people who can afford health care (and all would have Medicare.)

This particular Old Folks Home (As we call them) is on the ocean, and benefits from a cooler local climate.

CNC
... Not given to worrying about relatively remote situations over which I have no control.
... Oh! And when have you observed this situation?
Print the post Back To Top
No. of Recommendations: 0
It is interesting to me that there is a wait to get an apartment. They are not inexpensive.

Doesn't look bad to me and I doubt it would to anyone who is of an age trying to get in who also has owned a home in California for a long time( am not in CA).

Is that price listed for a couple or per person ?
Print the post Back To Top
No. of Recommendations: 1
Is that price listed for a couple or per person ?

Don't know. But there an additional minimum $200-$300K cover charge in addition to the monthly rent.

A former Exxon colleague of mine moved into an upscale CCRC in Houston and after a year living there is now discovering a number of financial irregularities and management self-dealing with service contracts.

This being Texas, Gov't oversight is next to non-existent, so residents are having to turn the the Courts for relief.

Just because it's "upscale" doesn't mean it's any good.

intercst
Print the post Back To Top
No. of Recommendations: 6
RAD: Is that price listed for a couple or per person ?

The move-in price is per apartment. The monthly is per person. The restaurant serves meals based on some kind of points. Breakfast is so many points, lunch and dinner are different. The standard points are not enough for three meals a day for a month, but extra meals are available for a nominal price. We met a lady who lives there and she manages to make her points reach for three meals a day. There is also a "snack bar" with hamburgers, and the like. The Countess and I will likely have breakfast in our apartment.

The meals are served restaurant style (Some other CCRC's we have visited are buffet style.) The times we have been there, the food is delicious and there is a good variety. I have wondered if the menus varies from day to day enough to avoid boredom from repetition. From seeing the variety available, this would not be the case. If you only eat kosher, maybe there are Jewish CCRC's.

If assistance in living is needed, that costs more. (Can be as little as reminding you to take your meds, maybe help with bathing, dressing, or whatever assistance is needed. That's the "assisted living" part.) Nursing care costs much more. Memory care is expensive, and involves a separate building with locks to keep people from wandering off. (ALZ patients sometimes do that.) Naturally we all hope (expect?) that we will never need anything more than independent living.

CNC
Print the post Back To Top
No. of Recommendations: 0
RAD: Is that price listed for a couple or per person ?

The move-in price is per apartment. The monthly is per person. The restaurant serves meals based on some kind of points. Breakfast is so many points, lunch and dinner are different. The standard points are not enough for three meals a day for a month, but extra meals are available for a nominal price. We met a lady who lives there and she manages to make her points reach for three meals a day. There is also a "snack bar" with hamburgers, and the like. The Countess and I will likely have breakfast in our apartment.


I looked at the current board of the retirement home. The numbers given are not what I saw and they may be for a month, not the move in costs, which are hundreds of thousands of dollars.

CNC
Print the post Back To Top
No. of Recommendations: 4
There was a three year waiting list at the time we applied. We are advised that they are telling new applicants it's up to 4 years now.

That's the Baby Boomer bulge. It worked its was through the elementary schools, the high schools, college, jobs, and now retirement homes.

There are more ~100 year olds now because there are a huge number of people in that cohort. What is eventually going to happen is that there will be a surplus of empty retirement homes & Continuing Care Retirement Communities as that cohort dies off and the following generations are more spread out in age. Of course, none of us will see that...because we are part of that bulge.
Print the post Back To Top
No. of Recommendations: 0
It sounds a like the Westminster Canterbury that Mom and Dad lived in in Irvington, VA. They were well cared for and surrounded by people who made an effort to socialize and care for each other - residents and employees alike. My daughter, who was about 25 at the time, joked that she wished she had a facility like that for young professionals - an easy to manage one floor cottage, somebody to cook your breakfast and dinner, and accessible health care. But Mom and Dad did not avoid the transition from the cottage to assisted living in the end. If you live to a ripe old age it is hard to avoid that.
Print the post Back To Top
No. of Recommendations: 0
I looked at the current board of the retirement home. The numbers given are not what I saw and they may be for a month, not the move in costs, which are hundreds of thousands of dollars.

I knew that. The buy in thing seems region dependent(or maybe dependent on state law). I have talked to the closest place to me(on a bet) and had no sticker shock. Personally, I have bought homes that would lend themselves to a personal caretaker. My choices may change in 20 years - we'll see.
Print the post Back To Top
No. of Recommendations: 0
My daughter, who was about 25 at the time, joked that she wished she had a facility like that for young professionals - an easy to manage one floor cottage, somebody to cook your breakfast and dinner, and accessible health care.

In some cities, there are places like this.
Print the post Back To Top
No. of Recommendations: 1
When my doggies were living, I took them to retirement centers to “entertain” the folks, doing demonstrations of their cuteness and friendliness and of course, tricks. I did this with a Pet Therapy group. After the demonstration, we would let the folks, pet on our dogs, hold them and talk to them and we would, the humans, would converse with them....so many of them missed the pets that they used to have.

So, the point is, when there were outbreaks of viruses and the like, these places were on a lock-down of sorts, no visitors from the outside were allowed in. And as for the mortality rate....I look at the obituaries everyday, and have seen the pattern.....high heat, frigid temperatures and it seems like folks will hold on until after Christmas and then pass away. Also, folks who have recently lost their spouses of many decades and were their caretakers.

Lucky Dog
Print the post Back To Top
No. of Recommendations: 2
At age 70, the Uniform Lifetime Table III assumes that you will live to the age of 97.4. What percentage of 70 year olds will live to that age when 50% of that population is expected to die in 14.40 years?

The Uniform Table is actually a joint-life survivorship table. The table assumes the beneficiary is exactly 10 years younger than the IRA owner regardless of the actual age of the beneficiary (unless the spouse is greater than 10 years younger and is the sole beneficiary...who can then use Table II) and is used as the standard even when there is no beneficiary, hence the number of life-expectancy months remaining will be the owner + 10-year-younger beneficiary. Its a compromise but is a lot easier to use than the joint life expectancy table used prior to 2002.

BruceM
Print the post Back To Top
No. of Recommendations: 0
BruceCM: "The latest info I've read on this is from ThinkAdvisor. There is a house version that increases the RMD year to 72 and a Senate version increasing it to 75. There are other provisions for making it easier to use insurance products in an IRA. Collective Investment Trusts in a 403(b), make student loan payments through their retirement plan at work, qualified charitable distributions for employer retirement plans, and other smaller stuff.

The HR is set for committee vote today I believe.

The President said he would generally support this final bill."


Has the GAO scored either bill? Likely decrease in tax revenue and increase in deficit, IMO.

Regards, JAFO
Print the post Back To Top
No. of Recommendations: 1
Has the GAO scored either bill? Likely decrease in tax revenue and increase in deficit, IMO.

I don't know if the GAO has scored either one, but the offset for raising the age to 72 in the House (SECURE) bill is that after Dec 31, 2019, all IRAs inherited by non-spouses will now need to be fully distributed within 10 years of the owner's death (with a few exceptions, like for minor children). Thus, Traditional IRAs will get taxed in a shorter timeframe and with higher distributions than likely would have been required, and Roth IRAs will be removed from their tax-free status sooner. Not sure if this additional revenue will totally offset the loss of the first 1 or 2 years of RMD tax revenue for those who wait until required to remove anything from their accounts, but it should help. (Whether it's 1 or 2 years of delay in RMDs depends on when you turn 70 1/2 - my RMDs will only be delayed by 1 year, for example, since I turn 70 1/2 in March.)

The RESA act actually requires the inherited IRA distributions to be even faster - it's requiring a 5 year distribution timeframe, like IRAs left to estates and trusts, instead of 10. I suspect that's why the RESA act is able to target an RMD age of 75, rather than 72.

AJ
Print the post Back To Top
No. of Recommendations: 1
Roth IRAs will be removed from their tax-free status sooner. - aj485

----------------

Huh??? I clearly missed something. Could you elaborate a little or provide a link.

Roth conversions are a big part of my retirement portfolio management.

Thanks, bhm
Print the post Back To Top
No. of Recommendations: 3
Roth IRAs will be removed from their tax-free status sooner. - aj485

----------------

Huh??? I clearly missed something. Could you elaborate a little or provide a link.

Roth conversions are a big part of my retirement portfolio management.


The part of the sentence you quoted is referring to Roth IRAs inherited by a non-spouse. Here's the context that you missed:

after Dec 31, 2019, all IRAs inherited by non-spouses will now need to be fully distributed within 10 years of the owner's death (with a few exceptions, like for minor children). Thus, Traditional IRAs will get taxed in a shorter timeframe and with higher distributions than likely would have been required, and Roth IRAs will be removed from their tax-free status sooner.

Right now, Roth IRAs have required RMDs, based on the age of the beneficiary. But based on Table I of IRS Pub 590-B https://www.irs.gov/pub/irs-pdf/p590b.pdf the beneficiary would have to be at least 101 at the time of the owner's death in order to be required to withdraw the entire IRA within 10 years.

AJ
Print the post Back To Top
No. of Recommendations: 1
The part of the sentence you quoted is referring to Roth IRAs inherited by a non-spouse. - AJ

-----------------

Thanks AJ. That is a relief, but still will impact my two kids.

I am positioning my assets to leave them a substantial pot of tax free money in the form of an inherited Roth account. I figured they could hang on to it and enjoy tax free growth for most of the rest of their lives only drawing down if needed. Now the tax free growth party will last only last ten years.
Print the post Back To Top
No. of Recommendations: 3
I am positioning my assets to leave them a substantial pot of tax free money in the form of an inherited Roth account. I figured they could hang on to it and enjoy tax free growth for most of the rest of their lives only drawing down if needed.

Yes, I think Congress is trying to fix the revenue problem of beneficiaries, beneficiaries of beneficiaries, beneficiaries of beneficiaries of beneficiaries, etc. being able to keep a significant chunk of Roth assets in a tax-free status in perpetuity.

Now the tax free growth party will last only last ten years.

Or five, if the Senate version is what's agreed upon.

AJ
Print the post Back To Top
No. of Recommendations: 0
That's the Baby Boomer bulge. It worked its was through the elementary schools, the high schools, college, jobs, and now retirement homes.

I'm not so sure. College and housing costs have skyrocketed, but middle-class wages are flat. Shouldn't the opposite be true with Boomers retiring en masse?
Print the post Back To Top
No. of Recommendations: 1
With rising life expectancy among higher income folks, I bet more than 5% make it to 97.4 years. The fastest growing segment of the population is centenarians.

Of the population that attains the age 97.4, half of that population is expected to live to age 105.

My dad died a few months short of his 98th birthday. My mother will be 97 this year. My mother got me interested in genealogical research. My MacFamilyTree database has a statistics page that reports that I have 7 ancestors that lived beyond 100. They were all women. I expect to be the first male in that group.

Personally, I would like to see the Life Expectancy Factors in the IRS' Universal Lifetime Tables reduced to ensure that there is sufficient wealth to support those in their late nineties and the expanding centenarian population.
Print the post Back To Top
No. of Recommendations: 13
Personally, I would like to see the Life Expectancy Factors in the IRS' Universal Lifetime Tables reduced to ensure that there is sufficient wealth to support those in their late nineties and the expanding centenarian population.

I don't think that updating the tables will make any difference in that regard. Just because an RMD is taken out of a retirement account doesn't mean that the money can't be reinvested in a taxable account. And nothing can stop people from taking out more than the RMD says that they have to take out. For example, even the penalties currently in place to prevent people from taking out money prior to 59 1/2 don't work to keep people from taking money out of their accounts. And there are even more people who use one of the exceptions, like first time home purchase or educational expenses, to take money out penalty (but not tax) free.

It's more likely that the reason that people will run out of money as they reach their late 90s or 100s is that they didn't plan for a retirement that would last that long, rather than being forced to take too much money out of their retirement account for the account to last.

AJ
Print the post Back To Top
No. of Recommendations: 0
...it seems like folks will hold on until after Christmas and then pass away.

MacFamilyTree has a chart that shows the months in which your male and female ancestors died. For females, one of the peak months for deaths is December. Male deaths peak in January. This could be related to the holiday bills coming in.

The most female deaths occurred in September. In October there was a spike in male deaths. The month in which the most male deaths occurred was April. This was also a month in which there was a spike in female deaths. What's that saying about Death and Taxes?
Print the post Back To Top
No. of Recommendations: 0
Personally, I would like to see the Life Expectancy Factors in the IRS' Universal Lifetime Tables reduced to ensure that there is sufficient wealth to support those in their late nineties and the expanding centenarian population.

I don't think that updating the tables will make any difference in that regard. Just because an RMD is taken out of a retirement account doesn't mean that the money can't be reinvested in a taxable account.


I hadn't anticipated the growth in the stock market that occurred after I retired in 2013 at age 68. I was shocked to discover that first RMD in 2015 was double what I had expected. I've transferred my first 5 years of RMD withdrawals to a taxable investment account where it has been reinvested to support my wife and I in our late nineties and early hundreds.

Unfortunately, my wife died in January. So, next year I will need to use a portion of my RMD withdrawal to pay Federal and state income taxes.
Print the post Back To Top
No. of Recommendations: 0
The SECURE version of this passed the House last week.
The article states they are looking to have the Senate vote on the SECURE version as well.

https://www.google.com/amp/s/www.forbes.com/sites/bobcarlson...
Print the post Back To Top
No. of Recommendations: 1
An interesting assessment from Groom Law, who has an excellent reputation in assessing new personal finance legislation and its potential effects on individuals

Senate leadership is now considering whether and how to move the SECURE Act. At this point, it does not appear that Majority Leader McConnell (R-KY) will bring the bill up for a full floor consideration this year, so Senate leadership is attempting to move the bill via unanimous consent, which is only possible if no Senator objects. Currently, there appears to be at least one objection. Another possible option is to attach the SECURE Act to a larger, must-pass bill, such as a spending bill later this year.

https://www.groom.com/resources/house-passes-bipartisan-reti...

BruceM
Print the post Back To Top