There’s a lot in the bill for pre-retirees, company sponsors and retirees. But the changes proposed for retirees jumped out at me. My tweet of the article led Arizona-based financial planner and portfolio manager Roger Nusbaum to retweet it, noting the benefits of optionality for retirees.
I asked him to elaborate, and I’ll share his thoughts:
“Lifting the age for RMDs tends to be viewed as a perk for the wealthy, but RMDs are often a burden for retirees with six-figure retirement accounts as opposed to truly wealthy in the seven figures. As a matter of circumstance, a retiree in this situation is often forced to take a $20,000 to $30,000 distribution they may not need so that the government can collect its $4,000 to $6,000 in taxes. Where optionality comes into play is being able to take less money out of a traditional IRA at age 72 or 73, thus paying less tax that year and leaving more in the account to grow. It also creates circumstances where it may make more sense to meet any income needs or fill any income gaps taking a withdrawal from a Roth IRA, which of course would not be a taxable event.”
The sponsors noted that this bill was partially a response to COVID-19’s impact on savings and, at least based on this Twitter exchange, it’s a hopeful sign that Congress will come up with real solutions that will help people.
As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.