New Required Minimum Distribution Rules For 2022

OneEyedDiva

OneEyedDiva

SF VIP
Location
New Jersey
"Americans are living longer than they were a generation ago, and the government knows it. Starting in 2022, that will be reflected in the amount of money you have to draw from retirement accounts at different ages." Bottom line, you'll be withdrawing less in any given year, which could be a good thing for your tax situation. Read more:
https://www.aarp.org/retirement/planning-for-retirement/info-2021/best-rmd-strategies.html
 

Alligatorob said:
Thanks Diva, I learned something!

I turn 70 this year and had assumed I would have to start the monitory deductions. This showed me that I can wait until 72 1/2. Not sure if I will, but I might... Also the conversion to Roth sounds interesting, I will look into that.
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Glad I could post something useful. I converted my IRA to a Roth decades ago, despite the advice that if one wasn't expecting to make a certain amount, it might not be worth it. IMO if you are not going to be getting a lot of money in retirement, why give even more than necessary to the government. It cost a bit, but it paid off big time. Now most of my investments are in a Roth, so not much taxing going on. 🤑
 

The retirement my boss set up were high fee mutual funds with no options to transfer them or do anything with them actually. Did not realize what I was getting into until it was getting to be a large sum of money. Now the RMD is coming up in August and my financial advisor gives me a small minimum amount I can draw every month. I used the calculator online and it says the amount should be about 4 times what he says. He is hard to get a hold of and even harder to talk to. I can draw more than he says, just can't figure out how he calculates the small amount he came up with. Complained to him recently when the market took a huge dive and he just said don't worry about it. Oh sure it's only my survival money, no big deal!
 
Alligatorob said:
Get a new financial advisor.

He is making money from your account, if he can't serve you I am sure someone else would be happy to.
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That's the problem, pretty much stuck with him for 90% of all my investment. An investment with nearly no options. I can take the money out of the stock market and it would make nearly nothing, or risk it in the current market. Or take it all out and loose 1/3 in taxes. Just need to make it until August and I can start drawing it out.
 
chrislind2 said:
That's the problem, pretty much stuck with him for 90% of all my investment.
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Can't you just roll it over to another tax protected account?

I have done that with a lot of mine. The new advisor should be able to invest in the same or similar ways and you will not pay any taxes or penalties.

Talk to another advisor about it she/he will be happy to tell you how. Your current advisor may not be, it will cost him money.
 
chrislind2 said:
That's the problem, pretty much stuck with him for 90% of all my investment. An investment with nearly no options. I can take the money out of the stock market and it would make nearly nothing, or risk it in the current market. Or take it all out and loose 1/3 in taxes. Just need to make it until August and I can start drawing it out.
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I don't understand your situation, but if what you say is true, seems like this is something you need to fix sooner as opposed to later. I personally think it is a dangerous time to be locked into any particular investment with the majority of your assets. I would at least take a monthly statement along to talk to someone else to find out what your options may be.

Good luck.
 
chrislind2 said:
I can take the money out of the stock market and it would make nearly nothing, or risk it in the current market. Or take it all out and loose 1/3 in taxes.
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You should be able to roll 401k money to another investment firm, you would need to talk to a different firm (such as Fidelity, Vanguard, etc) first and have them open a traditional IRA account for you, and get the new place to provide the 'payable' name and address, then the 401k people would (unless it is invested in something that can be moved "in kind") sell out what you have in the 401k and they would send a check to the new place.

Don't have the 401k people send the check to you because then they would withhold a lot of taxes, but they won't withhold taxes if the money is sent directly to the new place instead of to you.

I think having it in an IRA is better because you can choose how much to have withheld for taxes when you take sums of money out, but if you get disbursements from the 401k I believe they are required to withhold a rather high percentage for taxes (maybe 20%).

But, this is a really uncomfortable time to do it, the market seems to jump up and down, and if the market was down when the investments were sold, it is possible the market would be back up a couple weeks later when the money is available to re-invest in the new account.
 
chrislind2 said:
That's the problem, pretty much stuck with him for 90% of all my investment. An investment with nearly no options. I can take the money out of the stock market and it would make nearly nothing, or risk it in the current market. Or take it all out and loose 1/3 in taxes. Just need to make it until August and I can start drawing it out.
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Why are you "stuck with him"? @HoneyNut's made a very good suggestion, except having dealt with Vanguard for years and finally leaving them, I wouldn't recommend using that brokerage. Their website is not that user friendly and making transactions is cumbersome. Another financially savvy member of this forum agreed with me when I posted about them. I love, thus highly recommend Schwab. It's a full service brokerage that trades hundreds of different types of investments from their own and several other financial institutions. Many offerings are on their No Fee listing. I also love how user friendly Schwab's site is and how just about any information you'd want to get about investments is easily accessible.

I have transferred funds several times over the years and the process has gotten easier and easier. Schwab makes it even better. There is no need to mail forms (never trusted the P.O.), everything can be uploaded via their secure messaging system. Transfers are done digitally and takes only a few days. Also Schwab lets you know what your RMD is each year.
 
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I will contact another financial advisor. I have been with my current advisor/company for over 18 years. It was my boss that helped set up the retirement account and some of the other workers were very upset about the way it works. It's a mutual find/IRA and you cannot "roll it over" you can cash it out and pay a 35% tax on the money. You cannot borrow on it, you cannot withdraw it until you are at retirement age or the high tax kicks in again. I have been over this with the advisor, with my ex-boss and with several other people and this is the way it works. I will not pay another advisor to tell me what I already know, so if I cannot find an answer for free I won't find one.
 
Here is my take on advisors:
This was posted on the early retirement website
RUN FORREST!! RUN!!

Years ago I worked with a guy who left our company and got a job as a financial advisor with what was then Shearson-American Express and has since moved to Ameriprise Financial. Nice enough guy although we weren't close, I always thought him to be above-board and basically ethical and honest.

So some time had passed and I bump into him at a business after hours social gathering hosted by the local chamber of commerce. He hands me his card and invites me to get a "free consultation" for retirement planning. I was in my late 30's and thought it couldn't hurt so why not? Now I had started IRA investing in the mid-1980's with the typical 65/35 mix of stock & bond mutual funds with low fees. Not setting the world on fire but they were pretty much matching the decent market performers. I was slowly getting good returns.

THREE-CARD MONTY WITH LUNCH PROVIDED
We meet at his nice offices and he brings in coffee and lunch...does a Q&A about my current investments, future retirement goals, horizon, visualize what I expect at what age, etc. Then he tells me he'll take my current account info and compare it with his products and tells me his market resources will find "better options" to help me get to FIRE sooner and safer.

A couple of weeks go by and he calls to set up lunch and presents me with this custom 3-ring binder with my name on the front and it has tabbed sections with my goals and wants and needs. Then shows the amount I'll need for FIRE and outlines how to get there with Shearson-AE investment products ONLY. I get a tiny notation disclosing annual administrative and management fees along with a total balance fee based on a percentage of my total accounts and then other "possible fees" for update consultations, etc.

A quick add-up showed me I was looking at paying 3 to 4%+ before paying upfront loads on Shearson-American Express products, no mention of any other product outside their fold.

Keep in mind I had been using no-load / low cost mutual funds performing at decent levels. I then asked for the page that compares my current holdings with Shearson-AE products he was recommending. He sort of froze and said "Well I didn't really find anything that stood out worth mentioning here OR there was very little information on my holdings out there." HUH? What happened to all his "vast data resources on all financial products available" pitch?

I didn't really react but took all this as a well-scripted sales pitch and told him I'd think about it. A week later he called and I told him that I decided to go a different route but thanks for the lunches and binder.

SUMMATION:
Now I don't begrudge someone getting paid for a service but the built-in fees and charges just to have an account were beyond reasonable IMHO. Besides I had enough knowledge to know I could do OK on my own if I do a little reading and listen to enough people who know more than I do on certain things. And considering the fate of Shearson-American Express, I think I did the right thing by declining their portfolio.
 
chrislind2 said:
I will contact another financial advisor. I have been with my current advisor/company for over 18 years. It was my boss that helped set up the retirement account and some of the other workers were very upset about the way it works. It's a mutual find/IRA and you cannot "roll it over" you can cash it out and pay a 35% tax on the money. You cannot borrow on it, you cannot withdraw it until you are at retirement age or the high tax kicks in again. I have been over this with the advisor, with my ex-boss and with several other people and this is the way it works. I will not pay another advisor to tell me what I already know, so if I cannot find an answer for free I won't find one.
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No wonder other workers were upset! This reminds me of the State of N.J.'s original deferred compensation (DC) plan rules that could not be rolled over. The wording also stated that the money "belonged to the State of N.J." until it was taken out. I didn't like either of those conditions so I did not enroll until about two years before I retired after Gov. Christine Todd Whitman made the necessary changes. I then had them take the max allowed (20%) of my gross earnings. After retirement I rolled my DC into one of my IRA accounts that I established years before.
 
I'm dumb as a stump when it comes to this stuff. I have less than 5G in an IRA. I turned 72 this year. I took out my minimum required withdrawal. My stupid question is, since my only income is from Social Security, what determines if I have to even file taxes for 2022? Is it a dollar amount - and if so, what amount; Since I had to take the RMD, does that mean that I MUST file, regardless of income? I'd truly like a simple answer from some of the savvy folks on this site.
 
Em in Ohio said:
I'm dumb as a stump when it comes to this stuff. I have less than 5G in an IRA. I turned 72 this year. I took out my minimum required withdrawal. My stupid question is, since my only income is from Social Security, what determines if I have to even file taxes for 2022? Is it a dollar amount - and if so, what amount; Since I had to take the RMD, does that mean that I MUST file, regardless of income? I'd truly like a simple answer from some of the savvy folks on this site.
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Since tax deadline is over, I'd be interested in knowing what you did. Perhaps you were eligible for a refund. If you don't file, you won't know. One year it was indicated by my H & R Block software that I didn't need to file state taxes, so I didn't. I found out the following year I would have been eligible for a $50 refund for property owners and tenants, so although for state purposes I have zero taxable income (due to huge pension exemption and the fact that N.J. does not tax SS), I still file. Here's information from a government website where you can find out if you need(ed) to file an income tax return. Sorry I didn't find this sooner. https://www.usa.gov/who-needs-to-file-taxes
 
I spoke with my financial advisor and he found some money in with my investments that is just sitting and earning interest. He said I can draw on that until I start my RMD in August. It's enough to shore up my accounts until then. Since this RMD will come only 5 months before the end of 2022 it will be a pretty large amount. I had no idea. He has my investments in a mode to be as low risk as possible. I think I was less worried when I was raising my daughters and was flat broke. Those were good times. Loved playing with my daughters when they didn't think dad was in their way. Rode bikes a lot on the local bike trails, good memories. Money is freedom, but it can be fragile if not used properly. Had enough regrets in my life, I don't need one for not managing my retirement wisely.
 
Alligatorob said:
Thanks Diva, I learned something!

I turn 70 this year and had assumed I would have to start the mandatory deductions. This showed me that I can wait until 72 1/2. Not sure if I will, but I might... Also the conversion to Roth sounds interesting, I will look into that.
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Roth conversion is the best deal going if you have a fair amount in an ira
 

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