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Turning 72?


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For those of us turning 72 I found out that there is a required minimum withdrawal or r.m.w. from our 401ks so uncle Sam can get some more of our tax money.Mine is about $1000 a month. I thought of buying another old car but the wife might divorce me.That Sucks!

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26 minutes ago, TerryB said:

It used to be at 70 1/2 you had to start drawing down your tax deferred investments.  The law was changed recently to age 72.  

And the Uniform Lifetime Table used to calculate RMD (Required Minimum Distribution) after 2021 was changed - the new table results in a lower RMD.

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5 minutes ago, jrbartlett said:

But you can defer that if still working.

And if not working, you can defer your first RMD to April 1 of the year following the year you turn 72.  But you will have to take two RMDs that year, the first by April 1 and the regular annual by December 31.

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It's better to have something saved, and to have to pay taxes on it, as opposed to having nothing saved and paying no taxes. Anyway you saved on taxes while you were putting it away. Just be happy that you've made it to 72! 

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While I don't have a 401k, I am aware of that requirement. Since my job had a good pension I never did get started in a deferred plan when I could/should have, but I'm doing fine. At 67 I'm not taking the future for granted, current events have shown that nothing is guaranteed. So as I wrote, be glad that you've been around this long. Hopefully we'll all be around longer!

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Rivguy stated it well,  I made it to that age last June, but in 2017 was lucky enough to have Doctor's /surgeon who were able to "restore" me with some new parts - valves , primary lines etc. A major tune up.  Every day since has been a bonus - Life is very short everyone, enjoy it while you can and remember to tell your friends and family how much they mean to you, don't wait.

14 hours ago, Rivguy said:

 . Just be happy that you've made it to 72! 

 

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I am 72 now.

Never had an IRA as I was self-employed most of my life.

I figured early on that I had better invest right in order to have an income when I didn't want to work anymore.

I bought the complex where my boat dealership was and am enjoying the return on that now.

Rather than try to sell the dealership I decided to simply liquidate and fix the place up and collect lease rent.

I retired when I was 49 and now have good tenants with long term leases. 

I was pretty gutsy in my early dealings and went broke a couple of times.

Glad I finally hit on the right formula. 

72 ain't so bad, but I have to keep a slower pace and sleep more than I used to. 

A day's work is now closer to 4 or 5 hours as opposed to 10 or 14 hours.

Edited by JACK M (see edit history)
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I’m 25 with 3 times the experience and I have a retirement account. I have it because I worked by butt off for 45 years doing the 14 - 16 hour days and a lot of weekends. I enjoyed every minute of it. We also invested any extra dollars back into our own business in the building ( an 18,000 sq ft 100 year old mansion) and equipment to stay current. The pandemic killed our business and it forced me into retirement. I’m enjoying it beyond belief. I get to sleep late, do what I want and be with my wife. I should have done it 10 years ago. 
dave s 

Edited by SC38dls (see edit history)
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First year distribution on an IRA or 401K is about 3.8% of the total balance and the amount of required distribution goes up from there each year.

 

Look here.  https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/UniformLifetimeTable.pdf

 

The IRS table is wrong and still shows minimums required to start at 70-1/2. 

https://www.irs.gov/pub/irs-tege/uniform_rmd_wksht.pdf

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On 1/28/2022 at 7:50 PM, CHuDWah said:

And if not working, you can defer your first RMD to April 1 of the year following the year you turn 72.  But you will have to take two RMDs that year, the first by April 1 and the regular annual by December 31.

If the investment house refuses to distribute the RMD at the end of the year because the breadwinner died a few weeks earlier, it then distributes 2 RMDs the following year.  The surviving spouse will likely be put in a higher tax bracket by the IRS and have to pay higher Medicare premiums.  It happened in my family. 

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16 hours ago, Jim Skelly said:

If the investment house refuses to distribute the RMD at the end of the year because the breadwinner died a few weeks earlier, it then distributes 2 RMDs the following year.  The surviving spouse will likely be put in a higher tax bracket by the IRS and have to pay higher Medicare premiums.  It happened in my family. 

Not saying it didn't happen but I've never heard of an IRA custodian refusing to distribute a RMD.  It may have been because they hadn't received the death certificate - don't know if they're required to get one but they usually do to CYA.  Anyway, there are different RMD rules for account holders and beneficiaries, and different rules if the beneficiary is a spouse versus non-spouse.  And then there are different rules for traditional IRAs, Roth IRAs, etc.  Bottom line, if one isn't well-versed on RMDs, they should consult someone who is.

 

Yes, Medicare premiums have brackets based on income so increased income may result in higher premiums.

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7 hours ago, CHuDWah said:

Not saying it didn't happen but I've never heard of an IRA custodian refusing to distribute a RMD.  It may have been because they hadn't received the death certificate - don't know if they're required to get one but they usually do to CYA.  Anyway, there are different RMD rules for account holders and beneficiaries, and different rules if the beneficiary is a spouse versus non-spouse.  And then there are different rules for traditional IRAs, Roth IRAs, etc.  Bottom line, if one isn't well-versed on RMDs, they should consult someone who is.

 

Yes, Medicare premiums have brackets based on income so increased income may result in higher premiums.

The RMD check was supposed to be dated Dec. 31, but since the person died a few weeks prior, they froze the account until a new tax ID was issued for the Trust.  I agree that consulting with an expert is advised and getting a copy of the prospectus is a good idea, too.   

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18 hours ago, Jim Skelly said:

The RMD check was supposed to be dated Dec. 31, but since the person died a few weeks prior, they froze the account until a new tax ID was issued for the Trust.  I agree that consulting with an expert is advised and getting a copy of the prospectus is a good idea, too.   

Interesting.  I inherited an IRA from a parent - it was a while ago but i don't recall them getting a new tax ID.  Course it was a small amount so they may not have bothered - just reported it under my SSN.

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On 1/31/2022 at 1:46 PM, Restorer32 said:

Had a client whose Dad built a strip mall back in the 1980's.  It has long since been paid off and now my ex client who inherited the property has the problem of deciding what to do with his $90k/month rent checks. I feel for him.

Money is a pain in the ass....bob

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The government has studied this retirement program vigorously.  It is calculated to the penny.  For many the days of company pension are long gone. So is the gold watch the day one retires. 401k are not a sure thing.  One sniffle from the feds and interest rates the market takes a dump. Ones 401k vanishes. It's a crap shoot.  We can understand why some fill their mattress with cash. 

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On 1/28/2022 at 7:36 PM, CHuDWah said:

And the Uniform Lifetime Table used to calculate RMD (Required Minimum Distribution) after 2021 was changed - the new table results in a lower RMD.

    I just looked at the RMD tables on IRS.Gov and it;s identical to the old one.

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5 hours ago, Paul Dobbin said:

    I just looked at the RMD tables on IRS.Gov and it;s identical to the old one.

irs.gov (and the rest of the IRS) is way behind - note Publication 590-B on the website is the 2020 version.  Nevertheless, there is a new table effective 01/01/2022.  It has increased life expectancies which result in lower RMD.  Google 2022 Uniform Life Table for more info.

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"Ones 401k vanishes. It's a crap shoot.  We can understand why some fill their mattress with cash."

 

...not to pick a fight with this concept (we each do as we wish) but more people should understand economics and study facts. Ignoring the inflation disaster of this last year and perhaps 1980, the market has returned great results overall. If one looks at the last two dips in 2020 and 2009 both were what, 9-15 month events? The graph of most accounts, sectors, mutual funds, most ETFs are right back in line with where they would have been - pretty much. Sure a lost year to make profit or compound interest. Noone liquidates an entire IRA, Roth, 401k, 403b, etc in one year. Even if one needs money that year the account will bounce in successive years. My neighbor showed me her statements in 2009 and she was down over a million dollars. I believe she did nothing and she should be just fine right now....

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1 hour ago, Restorer32 said:

Wife and I were discussing this just last evening.  21 years ago when we married she had money in local bank CDs paying 10%.  Ahhh, for the old days.

My neighbor's nephew (in his early 30's) nearly passed out when I told him that in the early 1980's banks were giving 15-18% plus gifts for opening an account.

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2 hours ago, prewarnut said:

"Ones 401k vanishes. It's a crap shoot.  We can understand why some fill their mattress with cash."

 

...not to pick a fight with this concept (we each do as we wish) but more people should understand economics and study facts. Ignoring the inflation disaster of this last year and perhaps 1980, the market has returned great results overall. If one looks at the last two dips in 2020 and 2009 both were what, 9-15 month events? The graph of most accounts, sectors, mutual funds, most ETFs are right back in line with where they would have been - pretty much. Sure a lost year to make profit or compound interest. Noone liquidates an entire IRA, Roth, 401k, 403b, etc in one year. Even if one needs money that year the account will bounce in successive years. My neighbor showed me her statements in 2009 and she was down over a million dollars. I believe she did nothing and she should be just fine right now....

 

I do not argue the point however, time is not on everyone's side to re-coop.  But the underlying issue....the market is a risk. No guarantee.        

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What does this look like U.S. National Debt Tops $30 Trillion?

 

Who will pay for it.. 

 

Since your 72 you may not get a big tax bill.. My kids may have a hard time...

 

Mattress is not a bad idea  - maybe a safe..  If know one know you have it..  lol ..

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8D358720-6B76-4803-9E13-E2B9A9AD86F6.jpeg.396c7dd49911313bea66b1a80e55629e.jpegWe have a comfortable truck & open trailer.  Our touring car & trailer weigh 5,000 lbs & pull easily.  By spending our money touring, the kids will be relieved of disposing the balance.  I like the bumper sticker I once saw “ spending our kids inheritance “.  The problem with this is covid.

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