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Extension Sought For The Suspension Of The Required Minimum Distribution For Iras

Thursday, August 5, 2010 - 5:54 AM
From InvestmentNews
A pending House bill would suspend minimum-distribution rules for retirement accounts through the end of this year.

According to Wikipedia:
Congress in December, 2008 passed legislation suspending the minimum distribution requirements that are due for the 2009 calendar year. [...]

The RMD rules are designed to spread out the distributions of your entire interest in an IRA or plan account over your life expectancy or the joint life expectancy of you and your beneficiary. The purpose of the RMD rules is to ensure that people don't just accumulate retirement accounts, defer taxation, and leave these retirement funds as an inheritance. Instead, required minimum distributions force you to withdraw at least some of the funds as taxable distributions during your lifetime.

Ken TuminKen Tumin5,472 posts since
Nov 29, 2009
Rep Points: 125,708
1. Thursday, August 5, 2010 - 10:22 AM
My opinion is that this is very unfair. When they create a lifelong tax benefit with rules, they can't just willy nilly be changing them.

I, for one, specifically did NOT take a traditional IRA, instead took the tax hit up front with a ROTH IRA in order to be able to not be hit by the minimum withdrawal once I turned 70. Now, they are changing the rules, and those who took the tax benefit up front are also getting it on the backside!? Are they never going to have to pay their taxes, as I have already had to? This is very unfair to ME. Geez, they've already gotten their tax benefit up front, and now they get even more and I still get nothing!

If they don't want to make the required withdrawals, they can convert to ROTH IRAs -- and when they do, they will take the tax hit up front in trade for never having to make the required minimum withdrawal. I have paid it; why are they getting special treatment I am denied?!
me1004me1004374 posts since
Jan 16, 2010
Rep Points: 2,602
2. Thursday, August 5, 2010 - 11:57 AM
You're not getting nothing, exactly. Deferring RMD withdrawals is primarily used to support the equity markets by which most everyone theoretically benefits. Consider too that not all IRAs are original contribution - many are inherited BDAs with beneficiaries less than mandatory distribution age. Time will come and justice served, quite possibly at higher tax confiscation rates.
CraigPDCraigPD94 posts since
Jun 12, 2010
Rep Points: 336