In what seems to be a rare case of bipartisanship the House passed an enhancement to retirement plans and the Republican dominated Senate is expected to pass it with little or no changes. As part of the enhancement, the Required Minimum Distribution age will be increased from 70.5 to 72.
That means for our Tax Deferred TDA (403b), we will allow it to accumulate for another two years without paying federal tax. Unless the IRS changes the longevity percentages, at age 72 the RMD will require that the TDA total to be federally taxed at 3.91%
The RMD table by age can be found here.
"Unless the IRS changes the longevity percentages, at age 72 the RMD will require that the TDA total to be federally taxed at 3.91%”
ReplyDeleteSorry, long week. This means you would only pay tax on the percent you took out, not the entire amount of money sitting in the TDA?
No. The 3.91% of the total TDA amount is the minimum you must pay at age 72.
ReplyDeleteChaz, I think word “pay” in your 2:51pm comment is confusing and imprecise. I think the phrase “withdraw from your TDA” is a clearer description of what I think you mean.
ReplyDeleteBTW, Here’s the first sentence from the article you linked to the post—“Required Minimum Distribution (RMD) is the amount the IRS requires the owner of an Individual Retirement Account (IRA) to withdrawal each year.” Which is what I think you are trying to describe.
What is the age when I can first withdraw from my TDA, is it at 55 when I retire or 59 1/2?
ReplyDeleteplease let us know.
So I am clear, currently, when you turn 70.5 you have to pay tax on your whole TDA?
ReplyDeleteI thought you just had to take the minimum out and therefore pay taxes on just that amount.
Wait, we have to pay taxes on what is in tda? I'm confused, I thought we only pay when we pull it out. That means it's getting taxed twice?
ReplyDeleteI'll make it clear. You must take out a minimum of 3.91% of your total tax differed accounts. That includes the TDA, IRA, and 401k accounts at age 72.
ReplyDeleteIf you retire at 55, the TDA withdrawal does not have a penalty.
Don’t you pay taxes on the amount you withdraw from your TDA at age 55? Let’s say you withdraw 20k at age 55 from your TDA and retired, what are you expected to pay Re: taxes ?
DeleteThanks
After the age of 72, will the Fixed Return TDA continue to grow at 7%, minus the RMD? If you can use funds from other tax-deferred accounts (457, 401K, IRA) to cover the RMD, can the TDA continue to grow indefinitely (until death) at 7%? Thanks for feedback!
ReplyDeleteMy understanding is that each tax deferred account must meet the RMD percentages.
ReplyDeleteAbout half-way down the page from the following report may answer the question in regard to owning multiple IRA accounts and withdrawing your RMD.
ReplyDeletehttps://www.horanassoc.com/blog/2016/06/22/navigating-required-minimum-distributions-rmds-with-multiple-accounts
Another good site with basic Q/A format to help answer the multiple IRA account issue:
ReplyDeletehttps://www.schwab.com/public/schwab/investing/retirement_and_planning/understanding_iras/withdrawals_and_distributions/age_70_and_a_half_and_over
Meanwhile, keep researching.
Chaz Please go over taxes in TDA And 457 please.
ReplyDeleteThank you. Do you pay Federal taxes on the first 20,000 on both.
Thank you.
Our TDA is fully tax exempt in NYS. However, any TDA withdrawal is federally taxed.
ReplyDeleteThe 20,000 is for non NYS and private pensions.
Does TRS give retirees a hint when they need to start taking out and how much?
ReplyDelete7:44 PM The TRS sends you notice in the spring of the amount you Ned to withdraw. If you take no action in response, they send you a check for that amount a couple of days after Christmas. They are not the DOE they pretty much know what they’re doing
ReplyDeleteI am in my 4th year of withdrawal the min distribution. The UFT runs a very good session and you should attend. They notify everyone who reaches the age. There were about 600 people there. And they will answer all your questions. They basically view you as having a 20 year life span and adjust the min dist based on that calculation. The amount I have to take out grows each year.
ReplyDeleteThe 7% interest is applied to the remainder. So far I am still even with where I began - with slight growth -- but with growth comes higher distributions.
Yes we are taxed - and if you have a lot coming it bumps you into a new bracket. The first 20K are exempt from taxes -- I'm not sure if both state and federal.
I also have some 401k and they earn much less in interest so I hoped I could shift some of my withdrawal to those but
learned that you can't mix 401 with 403 which the TDA is.
I assume the UFT will now begin holding the sessions before people turn 72 instead of when they are 70.
Can you respond to the last reply do you need to take the RMD all from the TDA and the rest remaining continues to grow at 7% interest ?
ReplyDeleteThanks
11:16
ReplyDeleteI did answer your question. At 72 years of age you must take 3.91% of all tax def3rred accounts.
The Required Minimum Distribution is for all tax differed accounts and that includes the TDA.
ReplyDeleteWhat about the stretch provisions in the tda?Congress is messing around with this.
ReplyDelete