How are your investments doing?

[Highlandr]

It's still a forced action. You have to move it from a non-taxed account to a taxed account, or you'll be penalized, usually at 25%.

Applies to inherited plans also. My dad started getting the RMD from his 401k at 73 (I think). When he passed in 2020 me and my siblings inherited the 401K and we get an RMD every year just like he was still alive. AND... we have to take it ALL within ten years of his passing.

 

[MossRoad]

Applies to inherited plans also. My dad started getting the RMD from his 401k at 73 (I think). When he passed in 2020 me and my siblings inherited the 401K and we get an RMD every year just like he was still alive. AND... we have to take it ALL within ten years of his passing.

Nice!

My dad didn't have any retirement or pension plans. Not much savings, either. But he did have two houses and a will that said to sell everything and split it evenly between us 5 kids. That was a very nice gift.

I'd have rather he lived longer than get that gift, but was and am still very grateful for it.

 

[zzvyb6]

Remember. The RMD is the result of saving money BEFORE taxes. The original deal was that you could lower your tax bracket while working and save money without paying income tax on that money. The flip-side of that decision is that you pay those taxes at some point so you have to start taking distributions (Required Minimum Distributions) before you die and start paying the taxes. Nothing says you have to “spend” the money. Simply withdraw, pay the taxes, and reinvest the “after-tax” money if that’s best for you.

I get it. No one likes taxes. But RMDs are the result of a decision WE made years ago when we were focused on the early stages of this saving journey.

(Reminds me of a saying about death and taxes …)

Except that my tax bracket has been jumped TWICE and is way over what I was making in my good engineering job. So there's been no 'savings' for me at all.

 

[MossRoad]

Except that my tax bracket has been jumped TWICE and is way over what I was making in my good engineering job. So there's been no 'savings' for me at all.

What would the money be worth if you'd have stuffed it under your mattress all those years?

 

[ultrarunner]

If you go back several decades....

View attachment 4483915

I left out income means testing or pricing…

I have a recent retired coworker asked to come back and she is very cautious saying higher income means higher premiums…

 

[ultrarunner]

What would the money be worth if you'd have stuffed it under your mattress all those years?

Or bought US gold bullion coins… one average Joe had over 2 million in old ammo boxes…

 

[Torvy]

Sales taxes are the broadest, most fair option to replace other means of taxation. Easy to implement. Hard to avoid. Captures taxes from people who currently avoid any taxation...people who earn illegally, people who are resident aliens, visitors, etc. All of the negatives associated with sales taxes can easily be ameliorated by public policy that helps the truly poor.

The problem with tariffs is that they are regulatory more than income generating. That is why they were replaced. Northern manufacturers insisted on high tariffs that helped them and harmed Southern and Western farmers. Tariffs become a political football because they are twisted based on what and where. If tariffs are successful as a policy item, they cease to raise money. Hypothetically, all production becomes domestic.

Sales taxes push legislators (local, state and federal) to do what they can to improve the economy in order to increase revenues. (Requires that rates are fixed).

The other big reason tariffs don't work in today's government...the income tax led to a huge balloon of the spending side.

 

[MossRoad]

Sales taxes are the broadest, most fair option to replace other means of taxation. Easy to implement. Hard to avoid. Captures taxes from people who currently avoid any taxation...people who earn illegally, people who are resident aliens, visitors, etc. All of the negatives associated with sales taxes can easily be ameliorated by public policy that helps the truly poor.

The problem with tariffs is that they are regulatory more than income generating. That is why they were replaced. Northern manufacturers insisted on high tariffs that helped them and harmed Southern and Western farmers. Tariffs become a political football because they are twisted based on what and where. If tariffs are successful as a policy item, they cease to raise money. Hypothetically, all production becomes domestic.

Sales taxes push legislators (local, state and federal) to do what they can to improve the economy in order to increase revenues. (Requires that rates are fixed).

The other big reason tariffs don't work in today's government...the income tax led to a huge balloon of the spending side.

View attachment 4491793

An issue with sales tax is that low income earners have to spend a greater percentage of their income on necessities than high income earners. A flat tax with no min or max caps means everyone is in for the same percentage of their income. Sales tax, property tax, excise tax could all be eliminated if everyone paid the same percentage. Same thing with FICA cap. Remove it and social security would be funded.

 

[CloverKnollFarms]

An issue with sales tax is that low income earners have to spend a greater percentage of their income on necessities than high income earners. A flat tax with no min or max caps means everyone is in for the same percentage of their income. Sales tax, property tax, excise tax could all be eliminated if everyone paid the same percentage. Same thing with FICA cap. Remove it and social security would be funded.

I used to love it when I surpassed the max annually for OASDI. It was like getting a pay raise for 5 months

 

[MossRoad]

I used to love it when I surpassed the max annually for OASDI. It was like getting a pay raise for 5 months

I have not nor never will get to that level of income.