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Age 70.5 and Required Minimum Distribution Affecting Retirement Accounts

Approximately 20 years ago (I think it has been that long), Congress changed the maximum age to begin RMD from 75 to 70.5. Now that so many individuals have found their retirement accounts shrinking, I wonder whether it might not be advantageous for the age to begin RMD to be put back at 75 so that people have a longer time for their retirement accounts to recover before having to take the required distribution. Being forced to take the RMD from an account that has less value in it than the original and subsequent investments results in a real loss. I can think of no real disadvantage to either the retiree or the U.S. Treasury for moving it back to 75. I suspect the age was lowered to force retirees to begin spending their retirement money earlier (and perhaps not "skimp" so long).

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Reply to
zkeith
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It's hard to second guess why politicians change the laws. I think that there is an effort to recover taxes from untaxed income by lowering the maximum age for RMD.

Retirees don't have to spend the money they are required to withdraw since they can put it into a non-retirement account or if they qualify can convert it to a Roth retirement account.

-- Ron

-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
Ron Peterson

The RMD cannot be converted to Roth. One can convert other IRA funds beyond the RMD to Roth, and in the case where they have room in their current bracket, a conversion amount to "top off" that bracket is a good thing to consider.

(Disclaimers - Roth conversion are subject to income restrictions. Tax bracket does not always reflect actual incremental tax due as phaseouts or phaseins [such as taxing of SS benefits] may occur. I'm sure there are other individual issues to consider.)

Joe

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-------------------------------------- Misc.invest.financial-plan is a moderated newsgroup where Moderators strive to keep the conversations on-topic for financial planning. Other posting guidelines include a request for brevity and another for trimming posts to which we respond. For all of the other tips and suggestions, see "FROM THE MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the Newsgroup.

Reply to
joetaxpayer

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