Financial advice for geezers

 

Well, maybe we're all not over 70 here at the POI Factory but I know a lot here are and that's cool cool

For those who are now taking RMDs from retirement savings, you may want to look at the options now available for 2020.

I confess that I should not be offering financial advice but with that being said, I just received an email from my advisor talking of the new CARES Act. One part of the act is the suspension of the RMD requirement in 2020 from IRAs, 403(b) accounts, etc. RMDs can still be taken if needed, but if not needed, you can stop taking the RMD in 2020 when the markets are low and when the RMD will increase your income and therefore, the tax due next year. More:

https://www.aarp.org/money/investing/info-2020/cares-act-ret...

Thanks

Thanks Craig. I did not know this!

I stopped

I stopped my automatic withdrawals Sunday. This is great news.
I stumbled on an article about it on Google News. After researching it to make sure it was true I didn't take two seconds to make up my mind.

--
Mary, Nuvi 2450, Garmin Viago, Honda Navigation, Nuvi 750 (gave to son)

Thanks Craig.

Good information for all of us old farts!

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Alan - Android Auto, DriveLuxe 51LMT-S, DriveLuxe 50LMTHD, Nuvi 3597LMTHD, Oregon 550T, Nuvi 855, Nuvi 755T, Lowrance Endura Sierra, Bosch Nyon

TIAA

alandb wrote:

Good information for all of us old farts!

I haven't checked to confirm but I've heard that TIAA is not sending out scheduled RMDs from May 1 through the end of the year unless a client calls to ask that withdrawals be continued. I wonder if other institutions will do the same.

Transfer from a Traditional IRA to a Roth IRA

Should you have a Roth IRA, the stock market sell-off may be considered a good opportunity to transfer assets that you intend to keep from a traditional IRA to a Roth IRA.

Please be aware, that transferring assets from a traditional IRA to a Roth IRA is a taxable event. The hope here is that you are transferring assets that have temporarily lost value and will rapidly regain their value after the COVID-19 pandemic passes. Transferring assets that have temporarily lost value will mean paying less less in taxes.

As with any advice of a financial nature, get a second opinion on whether it is suitable for your situation.

--
Garmin Nuvi650 - Morehead City, NC

Good information to know but

Good information to know but I made my RMD shortly after Jan.1 so the information is too late to act upon. Had I known, I would probably have delayed my 2020 RMD.

When I make my annual RMD, I always reinvest the withdrawn funds in another taxable investment account, so I guess it's a wash either way.

I would check that if I was TIAA

CraigW wrote:
alandb wrote:

Good information for all of us old farts!

I haven't checked to confirm but I've heard that TIAA is not sending out scheduled RMDs from May 1 through the end of the year unless a client calls to ask that withdrawals be continued. I wonder if other institutions will do the same.

I'm surprised by what you say. One would think an individual has to opt out of RMD's, not opt in, even though Uncle Sam is permitting it.

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John from PA

Thank you CraigW

With all of the other stuff dominating the news, I hadn't heard about this. For some, skipping the RMD for this year may be useful as we all hope once our lives return to some semblance of what it was before everything went in the tank, perhaps the market will rebound and having that extra amount invested will pay off. Each has their own requirements and opinions and should do what they feel is best for them. At least this is an option.

--
"There's no substitute for local knowledge" nüvi 750, nüvi 3597

TIAA

John from PA wrote:

I'm surprised by what you say. One would think an individual has to opt out of RMD's, not opt in, even though Uncle Sam is permitting it.

TIAA states:

RMDs are suspended for 2020
To help provide relief for retirees, the CARES Act suspends annual required minimum distributions. Starting May 1 through December 31, this temporary suspension applies to RMD distributions from 401(a), 403(a), 403(b) and governmental 457(b) retirement plans and IRAs.

If you want to continue taking distributions, you may start a withdrawal.

Great info. My brother told

Great info. My brother told me about it a few days ago. I normally take my RMD out prorated over 12 months. Because the market was up so high in January, I took the entire RMD out. I need the money to live on, so am ok with my decision. At least now I will not have to cash out any stocks or funds for the rest of the year at their depressed levels.

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Dudlee

Thanks Craig

I spoke to my financial adviser last week who told me this was in the works. He was supposed to call me with details but I assume he is swamped with calls right now. Thanks for posting and confirming it has indeed happened.

I take my RMD in monthly installments and rely on it to supplement Social Security for my living expenses. I plan to reduce the amount but unfortunately, I can't eliminate it completely.

I'm sure there are many out there in the same boat.

Great Info - Thanks!

We'll talk to our CPA and may end up skipping the RMDs this year.

--
Tampa, FL - Garmin nüvi 660 (Software Ver 4.90), 2019.30 CN NA NT maps | Magellan Meridian Gold

RMD.

I took about 1/3 of my 2020 RMD in late January when the markets were high to make a couple of QCD's. Since I would make these annual donations whether they come from my IRA or some other source, I don't feel too bad about it. Now that the RMD has been eliminated for 2020, I will leave the remainder in place since the markets are so low (and probably headed lower before this is over).

--
Alan - Android Auto, DriveLuxe 51LMT-S, DriveLuxe 50LMTHD, Nuvi 3597LMTHD, Oregon 550T, Nuvi 855, Nuvi 755T, Lowrance Endura Sierra, Bosch Nyon

Ditto

alandb wrote:

I took about 1/3 of my 2020 RMD in late January when the markets were high to make a couple of QCD's. Since I would make these annual donations whether they come from my IRA or some other source, I don't feel too bad about it. Now that the RMD has been eliminated for 2020, I will leave the remainder in place since the markets are so low (and probably headed lower before this is over).

I was pretty much in your footsteps. In January, I had some QCDs taken from the total RMD needed. Then I set up quarterly withdrawals to meet the RMD by the end of the year: at the end of Mar/Jun/Spt/Dec. Unfortunately, the March RMD was withdrawn just before the suspension of the RMDs from CARES was announced, and of course, the markets were way down then. But at least I won't have to take the Jun/Spt/Dec RMD amounts. I do hope that TurboTax for 2020 will correctly handle QCDs in the year of suspended RMDs and not consider it income!

QCD and TurboTax.

CraigW wrote:

I was pretty much in your footsteps. In January, I had some QCDs taken from the total RMD needed. Then I set up quarterly withdrawals to meet the RMD by the end of the year: at the end of Mar/Jun/Spt/Dec. Unfortunately, the March RMD was withdrawn just before the suspension of the RMDs from CARES was announced, and of course, the markets were way down then. But at least I won't have to take the Jun/Spt/Dec RMD amounts. I do hope that TurboTax for 2020 will correctly handle QCDs in the year of suspended RMDs and not consider it income!

I started taking my taxes to an accountant, so I no longer use TurboTax. I did notice that for 2019, on the 1099 I received from my IRA, the box was checked for "Taxable amount not determined" and it showed my entire distribution amount for the year including the amount I donated via QCD. I provided the QCD documentation to my accountant and she simply reduced the Taxable income from the amount shown on the 1099 by the QCD amount. I assume you can do the same thing in Turbotax. I would guess reasonable amounts will never be questioned or audited. And even if you are audited it would be easy to provide the QCD documentation.

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Alan - Android Auto, DriveLuxe 51LMT-S, DriveLuxe 50LMTHD, Nuvi 3597LMTHD, Oregon 550T, Nuvi 855, Nuvi 755T, Lowrance Endura Sierra, Bosch Nyon

And now for something different...

CraigW wrote:
John from PA wrote:

I'm surprised by what you say. One would think an individual has to opt out of RMD's, not opt in, even though Uncle Sam is permitting it.

TIAA states:

RMDs are suspended for 2020
To help provide relief for retirees, the CARES Act suspends annual required minimum distributions. Starting May 1 through December 31, this temporary suspension applies to RMD distributions from 401(a), 403(a), 403(b) and governmental 457(b) retirement plans and IRAs.

If you want to continue taking distributions, you may start a withdrawal.

Change of plans. TIAA apparently heard from enough clients who want to keep their RMD payments for 2020 that now TIAA is keeping the 2020 RMD as set up by the client and it therefore now takes a call to cancel the remaining RMD for 2020. cool

I also learned ....

that if you took all or part of your RMD in 2020 before the CARES Act suspended it, you have 60 days from the time you withdrew it that you can "roll it back". If you took it out as a QCD, then of course it has already been paid to the charities and won't be taxed anyway, so you can't roll that portion back.

Quote:

If an individual has already withdrawn his or her RMD for 2020 or has withdrawn the first year’s 2019 RMD in 2020, the withdrawn amount may be rolled back to (a) the retirement plan (if the plan accepts rollbacks) or (b) an IRA, within 60 days from the date of withdrawal. If the distribution is rolled back to a retirement plan or IRA, the distribution will not be taxable in 2020.

https://azbigmedia.com/business/cares-act-waives-required-mi...

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Alan - Android Auto, DriveLuxe 51LMT-S, DriveLuxe 50LMTHD, Nuvi 3597LMTHD, Oregon 550T, Nuvi 855, Nuvi 755T, Lowrance Endura Sierra, Bosch Nyon

Interesting

alandb wrote:

I Also Learned ....that if you took all or part of your RMD in 2020 before the CARES Act suspended it, you have 60 days from the time you withdrew it that you can "roll it back". If you took it out as a QCD, then of course it has already been paid to the charities and won't be taxed anyway, so you can't roll that portion back.

Quote:

If an individual has already withdrawn his or her RMD for 2020 or has withdrawn the first year’s 2019 RMD in 2020, the withdrawn amount may be rolled back to (a) the retirement plan (if the plan accepts rollbacks) or (b) an IRA, within 60 days from the date of withdrawal. If the distribution is rolled back to a retirement plan or IRA, the distribution will not be taxable in 2020.

https://azbigmedia.com/business/cares-act-waives-required-minimum-distributions-for-2020/

Thanks. Good to know.