Comments on: Abolish the Minimum Required Distribution Rules http://blog.oup.com/2009/01/abolish-the-minimum-required-distribution-rules/ Academic insights for the thinking world. Fri, 10 Feb 2012 05:04:06 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: jake http://blog.oup.com/2009/01/abolish-the-minimum-required-distribution-rules/comment-page-1/#comment-156614 jake Sat, 06 Feb 2010 16:24:28 +0000 http://blog.oup.com/?p=2782#comment-156614 Here's what the MRD is doing to me. I turned 70 last year. In January this year, I received a $43,000 lump-sum retro payment of a pension to which I was entitled. Now, I must take another MRD of $24,000 for 2010, adding $67,000 to my taxable income for 2010, or postphone it to 2011 when I will have to take the 2010 MRD and an additional $24,000 MRD for 2011 for a total of $48,000 additional (involuntary) income for 2011. I want to determine when I use my funds, not the government. Here’s what the MRD is doing to me.
I turned 70 last year.
In January this year, I received a $43,000 lump-sum retro payment of a pension to which I was entitled.
Now, I must take another MRD of $24,000 for 2010, adding $67,000 to my taxable income for 2010, or postphone it to 2011 when I will have to take the 2010 MRD and an additional $24,000 MRD for 2011 for a total of $48,000 additional (involuntary) income for 2011.
I want to determine when I use my funds, not the government.

]]> By: M.C. Morrissey http://blog.oup.com/2009/01/abolish-the-minimum-required-distribution-rules/comment-page-1/#comment-149626 M.C. Morrissey Wed, 11 Mar 2009 17:26:13 +0000 http://blog.oup.com/?p=2782#comment-149626 Please help those of us who want to start a "citizen lobby" to our congress members. Who would be the best person(s) to start emailing regarding abolishing the stupid MRD? Should I just email my congressmember and senators? Which committee would generate the discussion, hearings, etc? thanks, M.C.M Please help those of us who want to start a “citizen lobby” to our congress members. Who would be the best person(s) to start emailing regarding abolishing the stupid MRD? Should I just email my congressmember and senators? Which committee would generate the discussion, hearings, etc? thanks, M.C.M

]]> By: Suzanne Wynn http://blog.oup.com/2009/01/abolish-the-minimum-required-distribution-rules/comment-page-1/#comment-148944 Suzanne Wynn Wed, 14 Jan 2009 00:18:12 +0000 http://blog.oup.com/?p=2782#comment-148944 I totally agree. The MRD rules simply do not make sense in a world when the average worker is now looking at retiring at age 70 instead of age 65. The recent guidance from the IRS on how they are implementing the provision in WRERA which alleviates the mandatory distributions for 2009 but did nothing for the retirees who will be forced to take distributions by April of 2008 is the perfect example of how the MRD rules are just failed tax policy. I wrote about the new guidance yesterday - http://www.qualifiedpensionconsulting.com/ppablog I totally agree. The MRD rules simply do not make sense in a world when the average worker is now looking at retiring at age 70 instead of age 65. The recent guidance from the IRS on how they are implementing the provision in WRERA which alleviates the mandatory distributions for 2009 but did nothing for the retirees who will be forced to take distributions by April of 2008 is the perfect example of how the MRD rules are just failed tax policy. I wrote about the new guidance yesterday – http://www.qualifiedpensionconsulting.com/ppablog

]]> By: T http://blog.oup.com/2009/01/abolish-the-minimum-required-distribution-rules/comment-page-1/#comment-148929 T Mon, 12 Jan 2009 19:00:23 +0000 http://blog.oup.com/?p=2782#comment-148929 Two problems: 1) If a 72 year old is invested 100% in stocks with no stable (bond / money market) funds, he's just asking for trouble, and that $4k that he has to take out is the least of his worries. If he were invested 50/50 in stocks/bonds, or hell, even 80/20 in stocks/bonds, he'd be able to withdraw that $4k from his bond funds, and allow his stocks to go back up. 2) If your 72 year old example really didn't need the money, he can take a distribution in-kind, or basically shift that $4k in mutual funds from a tax-deferred IRA to a non-tax-deferred investment account. Yes, he'll have to pay tax on it now (as usual), but it allows him to have the luxury of waiting for the stock market to go back up again without cashing out and losing money. (yes, he might have to pay taxes on $100-200 in long-term capital gains each year, but the tax amount is so miniscule I'm sure distributions from the fund would cover the $15-30 or so). Two problems:

1) If a 72 year old is invested 100% in stocks with no stable (bond / money market) funds, he’s just asking for trouble, and that $4k that he has to take out is the least of his worries. If he were invested 50/50 in stocks/bonds, or hell, even 80/20 in stocks/bonds, he’d be able to withdraw that $4k from his bond funds, and allow his stocks to go back up.

2) If your 72 year old example really didn’t need the money, he can take a distribution in-kind, or basically shift that $4k in mutual funds from a tax-deferred IRA to a non-tax-deferred investment account. Yes, he’ll have to pay tax on it now (as usual), but it allows him to have the luxury of waiting for the stock market to go back up again without cashing out and losing money. (yes, he might have to pay taxes on $100-200 in long-term capital gains each year, but the tax amount is so miniscule I’m sure distributions from the fund would cover the $15-30 or so).

]]>