Age for MRD being Reduced?
A industry professional I was talking to last week stated that the current administration was considering reducing the MRD age to the age when you take social security.
Makes sense to generate more tax revenue by forcing you into a higher bracket and/or making more of your SS tabable.
Anyone care to comment on this rumor?
Thanks
Permalink Submitted by Alan Spross on Mon, 2010-08-09 23:27
This is the first I’ve heard of it, but my initial reaction is that it won’t go very far. In the current recession, the number of people in their early 60s that are giving up finding work and starting SS early is increasing considerably. At the same time many of those that can work are hesitant to retire early and need to build their retirement assets. If you force those who have already been forced to tap SS early to also tap their IRAs early, the result will be that these people will be much more likely to run out of money.
But in a major recession, all sorts of proposals will surface, most of which will not see the light of day. My guess is that this is one of those types of proposals.
The Treasury should be very happy with the Roth conversion windfall they are getting as many people stress out over the inevitable higher income tax rates.
There is always the unintended consequences caused by tax law changes, and the analysis of how the consequences will interact has not been particularly good. Retirement and estate planning has always been fraught with risks, but right now long term planning is being converted to short term reactions as the threat of major change is more real than anytime in recent decades.